By David Lightman
The Sacramento Bee
(TNS)
The rich will get richer from President Donald Trump’s One Big Beautiful Bill Act’s tax provisions—but California’s millionaires won’t get as much of a benefit as their counterparts in most other states.
Californians with the top 1% of state incomes, or more than $1.08 million, rank 48th in tax cuts among the states, according to a new analysis by the Institute on Taxation and Economic Policy, a progressive Washington research group.
Only in Maine and New Jersey will the one-percenters get less. The biggest benefit goes to the ultrawealthy in Wyoming.
The top 1% in California will get a tax break averaging $35,260 next year, ITEP found. In Wyoming, the savings is $134,080. The U.S. average is $66,080.
All this is largely because of the change the new law makes regarding the deduction for state and local taxes. The bill extends the current federal income tax rates. Much of the 2017 law that established those rates was due to expire at the end of this year.
The bill, signed into law by Trump last month, added a new feature. The maximum deduction for state and local taxes, or SALT, went up to $40,000, instead of the $10,000 cap established by the 2017 act. The amount that can be deducted will go up 1% each year.
Filers with $500,000 or less in modified adjusted gross income, adjusted income plus some tax help, can take the full deduction. It’s phased out for incomes up to $600,000.
Recommended Articles
SALT, which can be claimed by taxpayers who itemize their deductions, is why the very rich get less of a break in California than most other states.
If the 2017 law had been allowed to end, they could have deducted all the state and local taxes they paid—presumably a lot more than $40,000. The pre-2017 law allowed unlimited SALT deductions.
In low-tax states, the pre-2017 law’s deductions were generally lower than in California, since their state and local taxes tend to be lower.
The rich still benefit
Overall, the rich in California and everywhere else still benefit disproportionately from the One Big Beautiful Bill Act, SALT or limited SALT, said ITEP and other analysts.
“The law favors the richest taxpayers and provides working-class Americans with relatively small tax cuts that will in many cases be more than offset by the import taxes, or tariffs, imposed by President Trump,” ITEP said in its analysis.
Put another way, more than 70% of net tax cuts will go to the wealthiest 20% of people next year. The middle 20% will get 10% of the benefit, and less than 1% will go to the poorest 20%.
Other analyses reached the same conclusions. “The measure is regressive, distributing most of its benefits to high-income households,” said Howard Gleckman, senior fellow at the nonpartisan Tax Policy Center.
It found the biggest winners from the bill would be households making from $460,000 to $1.1 million, with an average tax cut of $21,000, boosting their after-tax income by 4.4%.
Middle income earners, with incomes of $67,000 and $119,000, can anticipate a tax cut of about $1,800, increasing after-tax income by 2.3%.
Republicans counter that had the tax rates been allowed to revert to previous levels, the average American family would see income taxes go up $1,700 a year.
The Tax Policy Center found that most middle-income earners would pay an additional $1,380 in federal income tax in 2026 if the cuts were not extended.
Income levels include taxable income, tax-deductible benefits and other forms of compensation.
“Bottom line: On average, all income groups benefit from the tax cuts,” said Gleckman, “But high-income households benefit the most.’’
Photo caption: A mansion in the Bel Air neighborhood of Los Angeles. (rappensuncle/iStock)
_______
©2025 The Sacramento Bee. Visit sacbee.com. Distributed by Tribune Content Agency LLC.
Thanks for reading CPA Practice Advisor!
Subscribe Already registered? Log In
Need more information? Read the FAQs
