Sen. Cory Booker introduced legislation Monday that would eliminate federal income tax on the first $75,000 earned by married couples filing jointly, a proposal that would represent one of the most significant expansions of tax-free income in decades. The bill includes proportional thresholds for single filers and heads of household, along with more than doubling the current standard deduction.
The New Jersey Democrat’s proposal comes as the 2017 Tax Cuts and Jobs Act provisions are set to expire after 2025, creating an opening for lawmakers to reshape the tax code. Under current law, the standard deduction for married couples filing jointly stands at $30,000 for tax year 2025, with income above that threshold taxed starting at 10 percent.
“This tax cut would immediately put more money in your pocket every month to deal with the high price of everyday expenses, an unexpected emergency, or to plan for the future,” Booker said in a statement accompanying the bill’s introduction.
The proposal would effectively create a zero percent tax bracket up to $75,000 for joint filers. Single filers would see a proportionally lower threshold of approximately $37,500, according to the bill’s framework. The legislation also includes expansions to the Child Tax Credit and other existing tax benefits.
For a household earning the U.S. median income of $80,610, the change would reduce annual federal tax liability by roughly $5,500 based on current tax rates. Booker’s office estimates the median American family would see its federal tax bill cut by about 85 percent under the plan.
The proposal arrives amid sustained inflation that has pushed consumer prices up 25 percent since 2021 for food and energy, according to Bureau of Labor Statistics data through February 2026. The poverty rate stood at 11.6 percent in 2024, with middle-income households facing an average federal tax rate of 13.6 percent on adjusted gross income between $50,000 and $100,000.
Booker plans to fund the tax cuts through changes affecting high-income earners and large corporations. The senator argues that “the wealthiest few and the biggest corporations that are getting rich by keeping prices high” should “start paying their fair share.”
Specific revenue-raising provisions would include increasing the top marginal tax rate to 28 percent, eliminating certain corporate tax preferences, and closing loopholes used primarily by wealthy taxpayers. The carried interest provision, which allows investment managers to pay lower capital gains rates on income, has been a frequent target of Democratic tax reform efforts and could generate $14 billion over a decade if repealed, according to Tax Policy Center estimates.
The proposal echoes similar Democratic efforts in recent years. Rep. Ro Khanna introduced legislation in 2023 proposing a $50,000 income exemption. The 2021 American Rescue Plan temporarily expanded the Child Tax Credit to $3,600 per child with full refundability, a change that lifted 3 million children out of poverty according to Census Bureau data, but the expansion lapsed in 2022 without Republican support.
“Cory’s building on my $50K exemption—time for workers over billionaires dodging via offshore havens,” Khanna wrote on social media following Booker’s announcement.
Tax policy experts offered mixed assessments of the proposal’s feasibility. Len Burman, co-founder of the Tax Policy Center, told reporters the zero-bracket concept is “ambitious but feasible via deduction hikes” and could lift 10 million taxpayers from effective federal tax liability. However, he cautioned that corporate tax increases as offsets “risk investment flight.”
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said the plan appears deficit-neutral on paper but called revenue projections “optimistic on enforcement.” She compared it to the Tax Cuts and Jobs Act, which created a $1.9 trillion deficit hole, noting Booker’s proposal “needs ironclad loophole closures” to avoid similar fiscal impacts.
Kyle Pomerleau, a senior fellow at the American Enterprise Institute, pointed to historical data showing top-rate tax increases typically yield 20 to 30 percent less revenue than projected due to behavioral changes by high earners. “Sounds great for voters, but” the revenue assumptions may prove overly optimistic, he said in an analysis published Tuesday.
The legislation faces significant political hurdles in a divided Congress. Senate passage would likely require budget reconciliation, a process allowing certain fiscal legislation to advance with 51 votes rather than the typical 60-vote threshold. The Senate Finance Committee would need to hold hearings and markup sessions before any floor consideration, a process expected to begin in April 2026 if the bill gains traction.
Currently, 53 percent of Americans pay no federal income tax, primarily lower-income households whose earnings fall below taxable thresholds after deductions and credits. The top 1 percent of earners pay 45.8 percent of total federal income tax collections while earning 26 percent of total income, according to Tax Foundation data for 2025.
Corporate tax rates have drawn particular scrutiny in recent years. While the statutory federal corporate tax rate stands at 21 percent, the effective rate paid by large corporations averaged 13.9 percent in 2024, according to Joint Committee on Taxation analysis. The 2021 Inflation Reduction Act imposed a 15 percent minimum tax on corporations with over $1 billion in income, raising $222 billion in projected revenue.
For individual taxpayers, the practical impact would vary significantly by income level. Families earning between $50,000 and $150,000 annually could see take-home pay increase by $3,000 to $10,000 per year. A household earning exactly $75,000 in New Jersey would save approximately $8,200 annually, according to data from the online calculator released by Booker’s office.
Lower-income households earning under $40,000 would see minimal direct benefit from the income exemption since many already pay little or no federal income tax. However, families with children would benefit substantially from the expanded Child Tax Credit provisions included in the legislation.
The Congressional Budget Office has not yet scored Booker’s specific proposal, but director Phillip Swagel testified in February 2026 that a similar Child Tax Credit expansion in 2024 cost $110 billion while reducing child poverty by 30 percent. He indicated that Booker’s broader proposal would warrant “full dynamic scoring” to account for economic growth effects and behavioral responses.
Business owners and corporations would face different implications depending on their structure and size. Pass-through entities—businesses whose income flows directly to owners’ personal tax returns—could lose an average of $40,000 in annual tax savings if certain deductions are eliminated. Large corporations subject to new minimum taxes or reduced deductions would see effective tax rates rise by 5 to 10 percentage points.
Small businesses with less than $50 million in annual revenue would largely remain unaffected by the corporate provisions. Some economists project these businesses could benefit indirectly from increased consumer spending, with economic modeling suggesting each dollar of tax cuts generates approximately $1.50 in GDP growth through multiplier effects.
The proposal’s timing coincides with the 2026 midterm election cycle, when all 435 House seats and 34 Senate seats are contested. Tax policy has historically proven a mobilizing issue for both parties, with Republicans generally favoring lower rates across income levels and Democrats pushing for progressive structures that shift burdens toward higher earners.
If the legislation stalls at the federal level, some states may consider implementing similar structures within their own tax codes. New Jersey Governor Phil Murphy has supported tax relief measures for middle-income residents, and the state expanded its child tax credit in 2024, reducing tax filings by 15 percent among eligible families.
Taxpayers interested in estimating their potential savings can access the calculator tool on Booker’s Senate website. The IRS withholding estimator at irs.gov can help workers adjust their W-4 forms if the legislation advances, though no changes should be made until the bill passes and implementation details are finalized.
The legislation would require coordination with the Internal Revenue Service for implementation, potentially straining an agency already facing processing delays. The average tax refund processing time stood at 21 days for the 2024 filing season, and major tax code changes typically require updates to tax preparation software and IRS systems.
Goldman Sachs economists estimate that if enacted, the proposal could boost consumer spending enough to add 0.5 percentage points to GDP growth. However, failure to pass the legislation could leave taxpayers facing higher tax bills in 2027 when current Tax Cuts and Jobs Act provisions expire and brackets revert to pre-2018 levels.
Source: Residents could pay no federal tax on first $75K under new proposal | PIX11