Americans may pay no taxes on first $75,000 under new bill — key details explained

A new US tax reform proposal could allow Americans to keep the first $75,000 of income tax-free, a move that could dramatically reshape the standard deduction and federal income tax system. The bill, expected to be introduced by Cory Booker, would set the standard deduction at $75,000 for married couples and $37,500 for individuals, effectively cutting taxes for millions of middle- and lower-income Americans.

If the proposal becomes law, many households earning up to $75,000 would owe no federal income tax at all. Today, the standard deduction is roughly $29,200 for married couples and about $14,600 for single filers, meaning the new proposal would more than double the amount of tax-free income. Supporters say the plan could boost take-home pay, ease the cost-of-living crisis, and simplify the tax system. However, economists say the bill still needs a full cost estimate and strong support in Congress before it can move forward.

The proposal also expands the child tax credit and introduces a baby bonus, signaling a broader push to support working families.

$75,000 Tax-free income proposal could expand the standard deduction for millions

The core of the bill focuses on a massive expansion of the standard deduction, which reduces the portion of income that Americans must pay federal taxes on.

Under the proposal:

• Married couples could deduct $75,000 from their taxable income.
• Individual taxpayers could deduct $37,500.

That means a couple earning $75,000 annually would pay zero federal income tax, while a couple earning $90,000 would only pay tax on $15,000 of income.

This change would dramatically increase tax-free income for Americans, especially for middle-class workers who rely on the standard deduction instead of itemized deductions.

Supporters argue this simple adjustment could raise disposable income quickly without creating complicated tax credits or loopholes.

US Tax reform debate: Why lawmakers want higher tax-free income

Supporters of the plan say the US tax system must adapt to rising living costs and stagnant wages. Over the past two decades, housing prices, healthcare costs, and childcare expenses have surged faster than salaries.

By allowing households to keep the first $75,000 tax-free, the proposal aims to increase take-home pay for working families and stimulate consumer spending.

Economists often point out that consumer spending drives nearly two-thirds of the US economy. When households keep more of their income, they typically spend more on housing, food, travel, and services. That spending can help support small businesses and local economies.

Supporters say expanding the standard deduction offers one of the fastest ways to deliver tax relief without redesigning the entire tax code.

How the $75,000 Tax-free plan compares with previous US tax changes

The idea of expanding the standard deduction has appeared before in major US tax reform efforts.

The Tax Cuts and Jobs Act, signed by Donald Trump, nearly doubled the standard deduction in 2017. That change simplified tax filing for millions of Americans and reduced federal taxes for many households.

Another Republican-backed tax package in 2025 also expanded deductions further.

However, the new proposal would push tax-free income to levels never seen before in modern US tax policy, potentially eliminating federal income taxes for a large share of working households.

Tax analysts say such a move could shift more of the tax burden toward higher earners and corporations, depending on how lawmakers fund the plan.

Child tax credit expansion and $2,400 baby bonus in new tax bill

The proposed legislation also includes several family-focused tax benefits aimed at reducing financial pressure on parents.

The bill would expand the child tax credit to:

• $4,320 for children under age six
• $3,600 for children aged six to seventeen

In addition, the proposal introduces a $2,400 baby bonus for every newborn child. Lawmakers say the payment would help families cover early expenses such as healthcare, childcare supplies, and basic living costs.

Advocates believe these benefits could reduce child poverty and provide stronger financial support for working families.

How lawmakers plan to fund the $75,000 tax-free income proposal

Funding remains one of the biggest questions surrounding the proposed tax reform.

Senator Booker says lawmakers could pay for the tax cuts by raising taxes on high-income households, tightening corporate tax rules, and closing major tax loopholes used by large companies.

He also suggests limiting tax avoidance strategies that allow corporations to shift profits overseas.

However, the bill does not yet include a detailed cost estimate, and analysts say Congress will need a full budget analysis before debating the proposal seriously.

What the $75,000 Tax-Free plan could mean for US taxpayers

If Congress eventually approves the proposal, millions of Americans could see higher take-home pay and lower federal tax bills.

Families earning below the new threshold would effectively pay no federal income tax, while higher-income households would only pay taxes on earnings above the deduction.

Still, passing such a major tax reform would require broad political support and careful budget planning.

For now, the proposal has sparked a national debate about tax-free income thresholds, standard deduction expansion, and middle-class tax relief—issues likely to remain central in future US tax policy discussions.

FAQs:

1. Will Americans really keep the first $75,000 tax-free under the new US tax reform proposal?

The proposal introduced by Cory Booker would raise the standard deduction to $75,000 for married couples and $37,500 for individuals, meaning income below that level would not be taxed federally. However, the bill still needs approval from Congress and a full cost analysis before it can become law. If passed, it could significantly reduce federal income tax for millions of middle-income households.

2. How would the $75,000 tax-free income plan affect US taxpayers and the standard deduction?

The plan would more than double today’s standard deduction, which currently stands near $29,000 for married couples and about $14,600 for single filers. By expanding the tax-free income threshold, many families could pay little or no federal income tax, increasing take-home pay. Experts say the policy could boost consumer spending and provide relief during rising living costs.