January 30, 2026
Mr. Thanedar introduced the following bill; which was referred to the Committee on Ways and Means
To amend the Internal Revenue Code of 1986 to reform the individual income tax rates.
Section 1. Short title
This Act may be cited as the Middle Class Tax Cut Act
.
Sec. 2. Increased standard deduction
(a) In general
Section 63(c)(2) of the Internal Revenue Code of 1986 is amended—
(1)
in subparagraph (B), by striking $4,400
and inserting $75,000
, and
(2)
in subparagraph (C), by striking $3,000
and inserting $50,000
.
(b) Conforming amendments
Section 63(c)(4) of such Code is amended—
(1)
by inserting (2026 in the case of the dollar amounts contained in subparagraph (B) or (C) of paragraph (2))
after 1988
, and
(2)
in subparagraph (B)—
(A)
in clause (i)—
(i)
by striking paragraph (2)(B), (2)(C), or (5)(A)
and inserting paragraph (5)(A)
, and
(ii)
by striking and
at the end,
(B)
in clause (ii), by striking the period at the end and inserting , and
, and
(C)
by adding at the end the following new clause:
(i)
calendar year 2025in the case of the dollar amounts contained in subparagraph (B) or (C) of paragraph (2).
(c) Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2025.
Sec. 3. Individual income tax rate reform
(a) Joint returns and surviving spouses
Section 1(a) of the Internal Revenue Code of 1986 is amended by striking the table contained therein and inserting the following:
If taxable income is: The tax is: Not over $200,000 25% of taxable income. Over $200,000 but not over $400,000 $50,000, plus 30% of the excess over $200,000. Over $400,000 but not over $1,000,000 $110,000, plus 40% of the excess over $400,000. Over $1,000,000 but not over $2,000,000 $350,000, plus 50% of the excess over $1,000,000. Over $2,000,000 $850,000, plus 70% of the excess over $2,000,000.
(b) Heads of households
Section 1(b) of such Code is amended by striking the table contained therein and inserting the following:
If taxable income is: The tax is: Not over $150,000 25% of taxable income. Over $150,000 but not over $300,000 $37,500, plus 30% of the excess over $150,000. Over $300,000 but not over $750,000 $82,500, plus 40% of the excess over $300,000. Over $750,000 but not over $1,500,000 $262,500, plus 50% of the excess over $750,000. Over $1,500,000 $637,500, plus 70% of the excess over $1,500,000.
(c) Other individuals
Section 1 of such Code is amended by striking subsections (c) and (d) and inserting the following new subsection:
(d) Other individuals
There is hereby imposed on the taxable income of every individual (other than an individual subject to tax under subsection (a) or (b)) a tax determined in accordance with the following table:
If taxable income is: The tax is: Not over $100,000 25% of taxable income. Over $100,000 but not over $200,000 $25,000, plus 30% of the excess over $100,000. Over $200,000 but not over $500,000 $55,000, plus 40% of the excess over $200,000. Over $500,000 but not over $1,000,000 $175,000, plus 50% of the excess over $500,000. Over $1,000,000 $425,000, plus 70% of the excess over $1,000,000.
(d) Estates and trusts
Section 1(e) of such Code is amended by striking the table contained therein and inserting the following new table:
If taxable income is: The tax is: Not over $3,000 25% of taxable income. Over $3,000 but not over $11,000 $750, plus 30% of the excess over $3,000. Over $11,000 but not over $15,000 $3,150, plus 40% of the excess over $11,000. Over $15,000 but not over $20,000 $4,750, plus 50% of the excess over $15,000. Over $20,000 $7,250, plus 70% of the excess over $20,000.
(e) Repeal of reduced rates of tax on capital gains
Section 1 of such Code is amended by striking subsection (h).
(f) Conforming amendments
(1)
Section 1(f) of such Code is amended—
(A)
in the heading, by striking Phaseout of marriage penalty in 15-percent bracket
,
(B)
in paragraph (1)—
(i)
by striking 1993
and inserting 2026
(ii)
by striking (c),
,
(C)
in paragraph (2)—
(i)
by striking (c),
, and
(ii)
by amending subparagraph (A) to read as follows:
(A)
by increasing the minimum and maximum dollar amounts for each bracket for which a tax is imposed under such table by the cost-of-living adjustment for such calendar year, determined by substituting
2026for2016in paragraph (3)(A)(ii),,
(D)
in paragraph (7)(B)—
(i)
in the heading, by striking married individuals filing separately
and inserting certain individuals
, and
(ii)
by striking married individual filing a separate return
and inserting any individual subject to tax under subsection (d)
, and
(E)
by striking paragraph (8).
(2)
Section 1 of such Code is amended by striking subsections (i) and (j).
(g) Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2025.