Republicans are debating a higher tax rate for millionaires: Report

The new top rate could be around 39% to 40%, according to Bloomberg
Most Americans (58%) want higher taxes on households making $400K-plus: Pew
Republicans have generally opposed tax hikes over the years

Updated: Apr 4, 2025 / 04:41 PM CDT

US President-elect Donald Trump speaks to members of the media following a meeting with Republican Senators at the US Capitol in Washington, DC, US, on Wednesday, Jan. 8, 2025. A faction of Trump’s allies is harboring doubts about Republicans’ chances of passing a sweeping tax bill in 2025 amid party infighting and strategy disputes. Photographer: Valerie Plesch/Bloomberg via Getty Images

(NewsNation) — Republicans are thinking about creating a new tax bracket for those earning $1 million or more to offset some of the costs of their tax bill, Bloomberg reported, citing people familiar with the matter.

The new top rate could reportedly be around 39% to 40%, though discussions are still ongoing.

“By increasing taxes on high-earning Americans, [Republicans] would have more revenue to offset the costs of some of Trump’s campaign trail proposals,” Bloomberg wrote.

A recent analysis from the Peter G. Peterson Foundation found that, without spending cuts or tax increases, the menu of tax cut proposals made by President Trump and Republicans could add north of $9 trillion to the nation’s deficits over the next decade.

Last week, Axios reported that the Trump administration may allow the richest Americans’ tax rates to rise in return for cutting taxes on tips, which the president has promised.

Currently, federal tax rates are divided into seven brackets based on income level: 10%, 12%, 22%, 24%, 32%, 35% and 37%. The Tax Cuts and Jobs Act, which Trump signed into law during his first term, lowered the top marginal rate from 39.6% to 37%, where it stands today.

In 2025, the top rate of 37% is charged on income above $626,350 for single filers or $751,600 for a married couple.

While nothing is set in stone, the possibility of higher taxes on the wealthy marks a major departure from the Republican norm — a party that has long opposed tax increases.

Recent polling suggests that raising tax rates on high earners would be politically popular, even for a large share of Republicans.

Roughly 6 in 10 (58%) Americans say tax rates on household income over $400,000 should be raised, according to Pew Research. Most Democrats (74%) support the idea, while Republicans are more divided. A plurality of GOP respondents (43%) were in favor, while 28% thought the rate should be unchanged and 27% wanted it lowered.

Former President Ronald Reagan brought down the top tax rate from 70% to 28% by the time he left office. George W. Bush’s tax cuts lowered the top rate to 35% from 39.6% during the Clinton era.

Research from the Tax Foundation shows that the share of income taxes paid by the top 1% has increased from 33% in 2001 to 40% in 2022.

Over the same period, the share of income taxes paid by the bottom 50% of taxpayers fell from about 5% in 2001 to 3% in 2022.

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