Treasury Dept. says most filers claiming Trump tax breaks on tips, overtime made below $100,000

Most filers who claimed new Republican tax breaks — for tips, overtime, seniors and auto-loan interest — reported income below $100,000, according to a new Treasury Department analysis of this year’s filing season.

Republicans have been eagerly awaiting the tax relief to hit voters’ pocketbooks, betting that it will buoy the party’s midterm chances with people struggling with higher prices, and blunt Democratic attacks on other tax provisions, which independent analyses say favor high earners.

Filers making less than $100,000 per year made up 90% of people claiming the tax deduction for tipped wages, 75% of people claiming the overtime deduction, 62% of people claiming the deduction for the interest on loans for American-made cars, and 68% of people claiming an enhanced deduction for seniors, according to the administration’s analysis, which has not been previously reported.

Median household income in 2024 was $83,730, according to U.S. Census data.

Treasury Secretary Scott Bessent said in a statement that the analysis confirms that the temporary tax provisions — which went into effect last year and will last through the end of 2028 — “provide greater relief and financial certainty to low- and middle-income households.”

The agency did not provide the raw data behind its analysis. Filing season statistics showing tax claims by income — typically released in late May — have not yet been made public, and the administration did not indicate why the data release has been delayed.

The analysis mostly counted who claimed the deductions rather than how much money all income groups got back from the overall filing season. It does report average cuts for two income bands — more than $815 for filers making $50,000 to $100,000, and more than $1,250 for those making $100,000 to $200,000, among those who claimed one of the breaks — but the analysis does not report what filers above $200,000 and below $50,000 received.

The tax cuts for targeted groups were part of a broad tax and spending bill Republicans approved last summer. Republicans designed the temporary cuts to appeal to middle-income households. The tips deduction begins phasing out above $150,000 for single filers and $300,000 for joint filers, while the senior deduction phases out above $75,000 for single filers and $150,000 for joint filers.

“That design choice is why most of the claims for those the deductions were made by taxpayers earning under $200,000,” said Erica York, vice president of federal tax policy at the Tax Foundation. “These provisions were narrowly targeted to benefit certain taxpayers, but they also increase compliance costs and complicate the tax code.”

The law also included a suite of business tax cuts and an enhanced child tax credit, increased the standard deduction and made permanent the sweeping income tax cuts approved under Trump’s first term.

Those tax breaks were paired with cuts or changes to programs that support low-income households, including Medicaid, the Affordable Care Act, and the Supplemental Nutrition Assistance Program (SNAP).

The law was expected to reduce the tax burden for most Americans across income groups. The average refund as of May 8 was $3,276, more than 11% higher than the $2,939 average at the same time last year. Ninety-six percent of people whose tax burden went down made less than $200,000, according to the administration.

Republicans have spent months pointing to the approaching tax season as a turning point when Americans would begin to feel the impact of their tax legislation and give GOP lawmakers something concrete to run on in this fall’s midterm elections, as affordability remains top of mind and voters’ confidence in the economy has fallen.

“Everybody is looking at their tax returns and they’re getting tremendous amounts of money back,” Trump said at an event in Las Vegas in April, touting the impact of the tax cut legislation.

The broader law disproportionately benefits higher-income Americans, according to multiple independent analyses by tax policy experts, including the Congressional Budget Office. Cuts to social safety net programs, combined with an extension of lower income tax rates and business tax provisions that help higher-income households, creates an overall picture that benefits higher earners, according to a recent analysis of the law from the Tax Policy Center.

Republicans argue the law headed off a broad tax increase that would have hit most households when the 2017 cuts expired, and delivered targeted relief to workers.

Democrats have signaled that they plan to highlight the cuts to benefits as a part of their midterm election strategy focused on voters’ affordability concerns.