New Tax Bill Implications (Patreon)

This chart, from my Alma Mater - Penn Wharton Budget Model shows how the “Big Beautiful Bill” in USA will likely affect people’s take-home pay (after taxes and government benefits) by 2026, compared to now. It breaks down the impact by income groups, from the poorest to the richest.

What’s Changing?

• Income Groups: People are split into five income groups (quintiles), plus smaller groups for the wealthiest.

• Key Measures: How much their take-home pay changes in dollars and as a percentage by 2026.

How It Affects Different Groups

Lowest Income ($0–$17,000)

• Change: Down 13.6%

• Dollars: Lose $940

• What It Means: The poorest Americans will lose a big chunk of their income, likely because of cuts to government benefits or tax credits.

Low-Middle Income ($17,000–$51,000)

• Change: Down 1.3%

• Dollars: Lose $580

• What It Means: This group also loses money, but not as much. They might face higher taxes or less government support.

Middle Income ($51,000–$93,000)

• Change: Up 1.1%

• Dollars: Gain $815

• What It Means: Middle earners start to see small gains, probably from lower taxes or new benefits.

Upper-Middle Income ($93,000–$174,000)

• Change: Up 2.3%

• Dollars: Gain $3,075

• What It Means: This group gets bigger benefits, likely from tax breaks or subsidies.

Top 20% (Wealthiest Groups)

• $174,000–$263,000: Up 2.7%, gain $5,795

• $263,000–$388,000: Up 2.7%, gain $8,560

• $388,000–$988,000: Up 3.5%, gain $19,720

• $988,000–$4,325,000: Up 2.6%, gain $44,190

• $4,325,000+: Up 3.1%, gain $390,310

• What It Means: The richer you are, the more you gain—especially the ultra-wealthy, who could get hundreds of thousands more. This points to big tax cuts for high earners, like on investments or capital gains.

Big Picture

• Who Wins, Who Loses?

  • The bill favors the rich. The top 1% (especially the top 0.1%) get huge boosts, while the bottom 40%—especially the poorest—lose money. This widens the gap between rich and poor.

• What’s in the Bill?

  • It likely includes tax cuts for the wealthy (like lower income or estate taxes, or special treatment for investment income).

  • It may cut benefits for the poor, like tax credits for low earners or families.

  • There could be business tax breaks that mostly help the rich.

• Political Angle

  • The bill seems to follow a “trickle-down” idea: give more money to the rich to boost the economy.

  • It might upset lower-income people and politicians who want more fairness.

• Economic Risks

  • Poor and low-middle earners spend most of their money, so their losses could slow down the economy.

  • Growing inequality might cause social tension and make it harder for people to move up.

H/T Sanjay for the research and more analysis is needed. I know Chamath was not happy with the bill.