As Republican lawmakers scramble to find ways to offset the revenue losses from their massive but still unfinished package of tax cuts, President Trump has signaled that he would support raising taxes on some high-income households.
Trump reportedly told House Speaker Mike Johnson on Wednesday that he should raise the top marginal tax rate from 37% to 39.6%, effectively allowing the 2017 tax cuts to expire for some high earners. For the 2024 tax year, the income level at which the highest marginal rate kicked in was $609,350 for single filers and $731,200 for married couples filing jointly, but Trump has suggested that the top rate take effect at much higher levels, $2.5 million for single filers and $5 million for joint filers, according to reports by Punchbowl News and Bloomberg.
Trump also told Johnson he should consider eliminating the carried interest loophole, which some Wall Street investors use to lower their tax rate on certain kinds of investment income.
Reversing course: Trump had talked about raising taxes on the rich last month but ultimately dismissed the idea. “You’ll lose a lot of money if you do that,” the president told reporters in April. “And other countries that have done it have lost a lot of people. They lose their wealthy people. That would be bad, because the wealthy people pay the tax.”
The idea has resurfaced now as GOP lawmakers are getting desperate to find ways to offset the tax cuts and increased defense and border security spending they want to enact, with some now discussing the possibility of scaling back their proposed cuts due to concerns about the debt and deficit. House Ways and Means Committee Chair Jason Smith will reportedly head to the White House tomorrow to discuss tax options.
Still, it’s not clear that Republicans will embrace the idea of tax hikes of any kind. Johnson has been cool to the idea, saying in April, “I'm not in favor of raising the tax rates because our party is the group that stands against that traditionally.”
Worried about a potential loss in faith, powerful tax cut supporters made their views clear. Grover Norquist, president of Americans for Tax Reform, said his group “opposes any effort to increase income tax rates on individuals or businesses,” adding that “Trump ran on making all the tax rates reductions permanent.” And David McIntosh, president of Club for Growth, said in a statement that, “This is not a serious option, and it is political suicide.”
Another hurdle: In another sign of trouble for the GOP tax package, Republican lawmakers from New York rejected an offer today from Johnson and the Ways and Means Committee to raise the state and local tax (SALT) deduction from $10,000 to $30,000, saying it’s not enough. Raising the limit is a key demand by lawmakers from high-tax states like California, New York and New Jersey, but it comes with considerable cost — just another part of the puzzle Republicans need to solve before they can move forward on their tax bill.
“[N]o notice or agreement, the Speaker and the House Ways and Means Committee unilaterally proposed a flat $30,000 SALT cap—an amount they already knew would fall short of earning our support,” said Reps. Elise Stefanik, Andrew Garbarino, Nick LaLota and Mike Lawler. “It’s not just insulting—it risks derailing President Trump’s One Big Beautiful Bill.”