Updated October 18, 2026, 12:54 p.m. ET
The Trump administration’s economic policies have raised taxes and costs for all but the richest 1 percent of Americans, according to a new analysis from an economic think tank.
A typical U.S. consumer, with income in the middle 20%, will pay about $1,700 more in taxes and other costs in 2026 because of Trump’s policies, according to the report. The poorest 20% will pay about $750 more.
Only the top 1 percent of earners will pay less: $12,560 less, according to the report from the Institute on Tax and Economic Policy (ITEP), a left-leaning think tank.
The October 8 release focuses on three major policy changes under the second Trump administration: new tax provisions enacted in the One Big Beautiful Bill Act, the expiration of COVID-19-era Affordable Care Act tax credits, and price increases triggered by tariffs, the war in Iran, and immigration measures.
These additional costs could help explain why consumer confidence is near an all-time low and why household debt is rising, at a time when the U.S. economy appears strong by other indicators.
“No matter how much the Trump administration touts the tax cuts it enacted, it cannot ignore the fact that they caused increased costs that more than offset those tax cuts for most people except the wealthy,” said Steve Wamhoff, director of federal tax policy at ITEP.
Have Trump’s economic policies increased costs for Americans?
The report comes from a group generally critical of the Trump administration and its economic policies.
In response, the Trump administration offered a very different assessment of the president’s impact on the U.S. economy.
“President Trump’s aggressive, pro-growth economic agenda stopped (former President Joe) Biden’s inflationary crisis, spurred economic growth and created private sector jobs, and will continue to generate economic gains over the next two years,” White House spokesman Matthew Middleton said.
Middleton added: “Democrats claim to care about ‘affordability’ while supporting socialist candidates whose policies would cost every American household $355,000 over 10 years while adding $49 trillion to the deficit.” »
A White House report on the Trump tax cuts, released in June, found that they “delivered the largest share of tax relief directly to millions of low- and middle-income Americans.”
Other policy experts have questioned some of the ITEP report’s findings. A lot depends on how you evaluate Trump’s policy moves.
The One Big Beautiful Bill Act extended the tax cuts approved by Congress during the first Trump administration as part of the Tax Cuts and Jobs Act of 2017, as well as new reductions.
If the Trump administration is credited with extending these 2017 tax cuts, rather than letting them expire, then all but the lowest-income Americans saved money on taxes thanks to the One Big Beautiful Bill Act, a point the ITEP report acknowledges in an appendix.
“Without this action, taxes would have gone up,” said Kyle Pomerleau, a senior fellow at the libertarian American Enterprise Institute (AEI).
But the ITEP report only takes into account new tax policies adopted by Congress and Trump in 2025.
According to Wamhoff, the purpose of the report is to show how Americans actually experienced the economy under the second Trump administration.
Most Americans, he said, “don’t notice the extension of a tax break that has already been in place for several years and has benefited them for many years.”
How have taxes changed under the One Big Beautiful Bill Act?
According to the report, for a middle-income American, the One Big Beautiful Bill Act generates approximately $380 in new tax savings in 2026. When including tax cuts already in effect, the same taxpayer saves an additional $780.
ITEP estimates that Trump’s other “price gouging” policies, including tariffs, immigration crackdowns and the war in Iran, will cost the same middle-income consumer $1,850 in 2026. This figure matches the inflation caused by Trump’s policies.
Another major policy change addressed in the report is the expiration of COVID-era health care tax credits, which reduced the cost of health insurance for millions of Americans under the Affordable Care Act.
ITEP’s analysis considers this a policy decision by the Trump administration, which will cost the average middle-income American $230 in 2026.
“When you put together all the policies that actually affect taxes and costs for Americans, the typical American in every income group is worse off, except for Americans in the top 1 percent,” Wamhoff said. “This is the only group for whom the tax cuts are large enough to exceed the excess costs of other Trump administration policies.”
But here too, a lot depends on how you keep score.
These COVID-era health care tax credits were “meant to be temporary,” said Adam Michel, director of tax policy studies at the libertarian Cato Institute. “Democrats had the opportunity to make them permanent when they controlled the White House, but they didn’t.”
The ITEP report considers the expiration of these credits a political move by Trump, because the president and Congress could have extended them.
How much have tariffs and the war in Iran raised prices?
But the biggest new cost for most Americans, the report said, comes from Trump’s new policies that have raised consumer prices: tariffs, the war in Iran and restrictive immigration policies.
The report compares actual price increases during the second Trump administration with inflation projections from the Congressional Budget Office when he took over the presidency. Trump’s policies will cost middle-income Americans an additional $1,850 in 2026, the report said.
Is this a fair criticism? It depends who you ask.
“I think it’s fair to say that all of these policies have made life more expensive for Americans,” Michel de Cato said. “Tariffs are tax increases on Americans.”
The Cato Institute, like the AEI, generally favors limited taxation.
But AEI’s Pomerleau questions the validity of viewing non-tariff inflation as a cost to U.S. consumers. In times of inflation, he says, incomes and prices generally rise. Consumers can largely cover higher prices with higher incomes, even though the latest federal inflation report shows prices outpacing wages.
“It’s a complete change in terms of the effects on people’s well-being,” he said.
Who pays the most because of Trump’s economic policies?
Add it all up, the ITEP report says, almost all groups of U.S. earners will pay more taxes and additional costs in 2026 as a result of Trump’s economic policies.
The poorest 20% by income will pay an additional $750, the report said. The middle 20% will pay $1,700 more. All others, up to 98th percentile by income, pays at least $1,000 more.
In contrast, the richest 1% will spend $12,560 less on taxes and other costs in 2026.
Why could the top 1% alone save money thanks to Trump’s policies?
According to ITEP, the reason is the Trump tax cuts. Inflationary policies will cost the richest 1% an additional $15,990 in 2026, the report says. But new tax cuts will save them $28,550.
Other analysts have reached similar conclusions regarding the Trump tax cuts. The Congressional Budget Office, the Peter G. Peterson Foundation and others found that the tax cuts in the One Big Beautiful Bill Act favored higher-income households.
But here too, a lot depends on who you ask.
Trump’s initial tax cuts in 2017 lowered average tax rates for every income group, including for earners who pay very little in taxes, according to an analysis by the nonpartisan Tax Foundation.
True, it was the richest earners who saved the most money in taxes thanks to Trump’s cuts, but they paid a lot more in taxes to begin with.
“Of course,” said Michel de Cato, “those who pay the most taxes will see the greatest reduction in monetary value.”
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