The Winners and Losers of Trump’s Tax Policy

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1:23Do that with Acrobat. You have 30 plus documents that need to be simplified into a proposal. Do that. Do that. Do that with Acrobat. Learn more at adobe.com slash do that with Acrobat. Bloomberg Audio Studios. Podcasts. Radio. News. Today is tax day in the United States, and in many ways, it's also a test of the changes to tax policy, President Trump ushered in through the One Big Beautiful Bill Act he signed into law last year. Next year, you will also see the results of the largest tax cuts in American history that were really accomplished through our great, big, beautiful bill, perhaps the most sweeping legislation.

2:10There's all these sort of like bells and whistles that they've added to the tax code that are impacting people in different ways. Ben Steverman covers taxes, wealth planning and philanthropy at Bloomberg. What changes in this new law is there's a bunch of little provisions like no tax on tips, no tax on overtime. There's a new senior deduction. There's Trump accounts for a savings device for kids. Trump's tax policy was meant to be a win for Republicans, a shift in the tax code that would lead to larger refunds for many Americans and a political windfall that Republicans hope voters will remember when they head to the polls this fall.

2:48Here's House Speaker Mike Johnson touting that legislation earlier today. And it is a great day because this filing season, three things are happening, as you just heard summarized there. Lower taxes, bigger refunds and more money in the pockets of hardworking Americans. But the picture is more complicated. Tax refunds are up this year, but they've largely fallen short of what the White House promised. And with broader economic pressure on some Americans, will a slight bump even register? The tax situation is sort of a sideline to other issues that seem much more present in people's minds about the economy right now.

3:26Like you might be getting a couple thousand dollars from your tax refund that you didn't expect, but your utility bills are up. I think the Republicans are really hoping for a political benefit from this tax season. And they may get a small one, but their problem is that there are these other issues.

3:48I'm David Gurra, and this is The Big Take from Bloomberg News. Today on the show, who are the winners and losers in this year's tax season and how those filers could determine the outcome of the 2026 midterms?

4:04We're talking on tax day. People have been filing their taxes early. And I'm curious, kind of across the board, what the difference in refunds on average has been versus what President Trump promised. So I heard him talking about average refunds going to be$1 ,000. Are we anywhere close to that? Refunds are up. But the thing is, I think that's the average. The refunds are up about$350 from last year. The reality, though, is that that's just an average. And there's some people who are going to see no change whatsoever. However, and then there's some people are going to get thousands of dollars, especially if you qualify for this new SALT deduction.

4:40So they moved the ability to deduct state and local taxes, that's SALT, from$10 ,000. There was a limit of$10 ,000 in the 2017 law that was very controversial, especially if you had high property taxes or you lived in a high tax state because you weren't able to deduct the taxes that you were already paying. This is sort of income you weren't even getting because it was coming off the top. They moved that from$10 ,000 to$40 ,000. If you were able to qualify for that, that's a huge benefit. That could be$10 ,000 extra you're getting back from the government compared to last year. But the problem is very few people have that much salt.

5:15That's a lot. And also the thing starts phasing out at$500 ,000 of income. So if you make more than$600 ,000, you're stuck with a$10 ,000 salt cap. So this gets complicated, but the point is that a very narrow band of people are getting a sizable benefit from that provision. You write that increasingly the biggest factor that determines what people owe the government is what they do for a living, how they make their money. Explain that. This is clearest at the top where there are different rates. And some of this is pre-existed Trump. There are different rates that people pay for different kinds of income.

5:49So investors who have long-term capital gains will pay about 24 % at the top rate. Somebody who's working for their money, making millions of dollars, professional entertainer, a banker, top lawyer, they're paying a top rate of 37%. So you start there. But what the Trump law does is it creates new carve-outs for people to be able to lower their tax burden from sort of the ordinary rate. So the ordinary rate ends up getting paid by salaried workers, hourly workers who don't have tips or overtime. And a lot of other groups get these little goodies if they qualify. There's a lot of fine print that attaches to them.

6:32Ben, it does strike me that many of these policy changes don't impact a lot of Americans. There's the SALT deduction, which is limited by income and geography. No taxes on tips is flashy, but it doesn't affect a lot of Americans. it does seem like this is emblematic of the way that Trumpera tax policy is constructed. Some of the benefits are pretty widely spread. Like if you're a senior, there are millions of seniors that are benefiting from the$6 ,000 deduction. There's a phase out for that, too, but there's a lot of people benefiting. But if you're talking about tipped workers who are going to benefit from this, that might be 3 % of the total workforce, according to one estimate I saw.

7:09That's not very many people. And it also means sort of weird situations where the server at the steakhouse is paying significantly less taxes than the convenience store clerk at the outlet next door or something. It creates sort of odd disparities that people might – a lot of people just don't know about, but we've tried to illuminate them in our stories. Yeah, you've talked to taxpayers, and I wonder if there are any examples that come to mind of how members of these different groups, so working class people, investors, salaried workers, are kind of navigating the shifts. Any stories that stood out to you from those conversations you've been having?

7:47You know, we have technology now that helps us understand this stuff. But talking to folks in the run up to tax season, people didn't know if they were going to benefit or not. So I think because it's gotten so complicated, we have to lean on technology. And in fact, it's in some ways gotten too complicated for the technology. Like it's possible to file your taxes on software, but asking ChatGPT about this is not going to get you anywhere. We did a story about AI and taxes and AI just has really struggles with figuring out the tax code because AI is often based on probability and large language models.

8:26And it doesn't they're sort of incompatible with a tax code where there's always one right answer. This is a tax season that is taking place in a difficult year, I think, for a lot of Americans, for working class Americans in particular. The health care tax credits have expired. There is an affordability crisis across the country. A lot of questions about where their tax dollars are going at the state and the federal levels. What are you hearing, particularly from working class Americans as they filed taxes this year, about how they're feeling? I think in some ways the tax situation is sort of a sideline to other issues that seem much more present in people's minds about the economy right now.

9:06Like you might be getting a couple thousand dollars from your tax refund that you didn't expect, but your utility bills are up because, first of all, it's been a cold winter in parts of the United States, but also just the utility costs have gone through the roof. The Republicans are really hoping for a political benefit from this tax season, and they may get a small one, but their problem is that there are these other issues. We have like it's hard to get a job right now. Inflation is looking pretty hot. Gas prices are high. Those kinds of things that are taking money away at the same time. One thing we've seen that's interesting in this year is people on the left who are very upset about things the Trump administration is doing mostly, especially the war in Iran and the relationship with Israel and other things, who are saying that they're not going to pay their taxes.

9:55sort of a tax protest or tax strike. I think it's a very small group, but I think it's a sign that there is a certain powerlessness among some on the left, and they're thinking about the tax code as a way to make a stand and fight back.

10:13After the break, how this tax season could impact Trump and the Republican Party at the polls.

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13:16Midterm elections are later this year, and for President Trump and the Republican Party, the impact of the One Big Beautiful Bill Act is already playing into their messaging to the American people. I asked Bloomberg's Ben Steverman how tax policy and politics could converge in the voting booth. How are these tax policies, the ones that President Trump pushed for, impacting his base in particular? You know, I think Republicans learned something from the 2017 law, which Democrats really painted as a giveaway to the rich. And there was reason to think that. I mean, a lot of benefits were directed to wealthy people and to business owners, especially.

13:55This law, I think they learned that they wanted to send a different message. And so the no tax on tips and no tax on overtime and the senior benefit, in a lot of cases, they're small numbers of people affected, but it's symbolic. It's saying we're not just the party of the wealthy. We're the party of a broader group of people. And so we'll see how that plays out. I want to dig into this a bit more because you write about how the way these tax policies are shaped is in part by kind of a populist MAGA worldview. And I've asked you about working class people, but it's clear the White House, Republican Party sort of doesn't see it as that big of a monolith, at least when it's defining or creating tax policy at this point in time.

14:40You write about how there can be these stark differences between somebody who is working class, maybe working at a restaurant, and somebody who's working class and working as a secretary at a school, for example. Talk a bit about that. Yeah, I mean, the world is complicated, but the tax code like puts everybody in different boxes and the people that get hurt or the people who pay more, let's say, because of these policies generally are salaried workers. And like the most prominent members of that group are college educated folks who in three elections in a row have voted against Donald Trump by pretty wide margins.

15:17To vote Democrat. Yeah. Yeah. That's oversimplifying, though, because a lot of blue-collar people are going to be paying pretty high taxes compared to other blue-collar people or compared to the senior living next door or something like that. On the issue of who's being heard here, who's shaping these policies, somebody bemoans to you there's no regular person lobby. Yeah. Who is being heard? Who is the administration listening to when it crafts tax policy? Business owners have done a really great job of selling Republican lawmakers and Trump on a bunch of provisions. One is this new law allows them to accelerate deductions.

15:53So you buy an equipment purchase, you can write that off sort of right away. And it's a huge benefit if you're expanding your factory or something. And there's economic logic behind that one. There's another one that's basically a 20 % discount if you own a pass-through business, but only in certain industries. They're very clear. If you are in law or medicine, accounting, you can't get it. Another one that was really surprising in the bill that kind of came out of nowhere was there's something that Silicon Valley really loves, which is called the Qualified Small Business Stock Deduction. And it's, again, pretty obscure, but it's a huge benefit because it allows basically investors and startups to pay zero taxes if certain conditions are met.

16:37If they invest early in some successful company and then it pops, 10 times their initial stake is basically tax-free up to. There was also another way you could just save$10 million off the top too. They moved that to$15 million. So that's like a 50 percent increase in the amount that people are able to save under that little obscure thing. But it's like we didn't see that coming as tax policy folks. I have noticed today on tax day a lot of Republicans talking about new tax policies. President Trump's going to go to Nevada to give a speech on tax policy on Thursday. How are Republicans talking about these tax policy changes?

17:14We spoke just a moment ago about how President Trump introduced this expectation refunds would be on average a thousand dollars. So far, they're much less than than that. What do you hear as you listen to Republicans talking about the benefits of this tax legislation? Yeah, they're making an argument about that. This is the kind of tax policy that it will juice economic growth and grow the economy. And like that's very important. If you look at the fiscal situation in the United States, like we are not taking in enough revenue. So this is a bet, a very, very big bet that we can cut taxes now and that will grow the economy enough that it will make up for the fact that we are in a fiscal hole that's huge.

17:57I saw this recent poll. It was a Fox News poll. Seven in 10 Americans still feel their tax burden is too high and the wealthy don't pay enough. There is this effort underway to rebrand that one big, beautiful bill act, to call it something different, to kind of emphasize the fact that it was, at least as Republicans see it, designed to help working class Americans. How big an issue is this, just Americans understanding the changes that have been put in place here and perhaps what benefits they might reap as a result of that? If you focus only on no tax on tips or no tax on overtime, those are really good issues for Republicans.

18:30So it was the Trump accounts idea, which is like a savings account for kids that was in the law. But if you look at the total cost of the bill, they're just minuscule. It's like tiny. And you look at the health care cuts and the business tax deductions and just the extending of rates, lower rates for wealthy folks. Democrats have an argument here. I don't know that Americans are hearing from them, but I think Americans are already very cynical about the tax code. And I think a lot of Americans don't understand the loopholes that wealthy people get to use. And I think that that is something that Democrats will probably start talking about more or will start penetrating people's consciousness as we get out on the campaign trail for the midterms.

19:27today at bloomberg.com slash podcast offer. If you liked this episode, make sure to follow and review The Big Take wherever you listen to podcasts. It helps people find the show. Thanks for listening. We'll be back tomorrow.

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