If you earn less than $75,000 a year as a household, imagine keeping every dollar of that income free from federal taxes. That is the pitch two Democratic senators are now making to American workers, and the numbers behind it are aggressive enough to deserve a closer look.
Sen. Cory Booker of New Jersey and Sen. Chris Van Hollen of Maryland each introduced separate bills this week that would dramatically expand the amount of income shielded from the IRS. The proposals land at a politically charged moment.
Republicans are already promoting the tax relief baked into the One Big Beautiful Bill Act, signed into law last July, which added a $6,000 senior deduction, eliminated taxes on tips and overtime for qualifying workers, and is delivering higher tax refunds this filing season.
But critics, including several nonpartisan policy groups, argue those benefits tilt heavily toward higher earners. The Democratic counter-proposals take a different approach: go straight at the cost of living and shield the income ordinary households actually need to survive.
Two bills, one goal: shield your first dollars from federal taxes
Both proposals target the same problem: the gap between what you earn and what it costs to live. But they use different tools to get there.
Van Hollen’s Working Americans’ Tax Cut Act introduces a cost-of-living exemption pegged to research from the Massachusetts Institute of Technology’s Living Wage Calculator. MIT estimates that a single worker needs at least $46,000 a year just to cover the basics.
Under this bill, that entire amount would be exempt from federal income tax. Married couples filing jointly could exempt up to $92,000, and heads of household up to $64,400, according to the nonpartisan Institute on Taxation and Economic Policy.
Booker’s Keep Your Pay Act takes a blunter approach. It would more than double the standard deduction to $75,000 for married couples filing jointly, with proportional increases for single filers and heads of household.
Because the standard deduction applies universally, higher-income households would also benefit. A married couple earning $300,000 a year with no children would save roughly $10,000 annually under Booker’s plan, according to a calculator on his Senate website.
Your standard deduction right now versus what these bills propose
To understand how big these proposals are, you need to know where the baseline sits today.
About nine in ten American households claim the standard deduction rather than itemizing, according to IRS data. For the 2026 tax year, the standard deduction amounts are:
- Under Booker’s plan, that $32,200 married-couple deduction would jump to $75,000.
- Under Van Hollen’s plan, the cost-of-living exemption would effectively shield $92,000 for married couples.
Either way, the first major chunk of your household income would be entirely untouched by federal income tax.
How Van Hollen’s exemption differs from a standard deduction
Van Hollen’s bill is not a simple deduction increase. It creates a new alternative maximum tax. If you qualify, your federal income tax cannot exceed 25.5% of your income above the exemption threshold, according to the Yale Budget Lab.
There is also an income phaseout: single workers earning above $80,500 start losing the benefit. If your income reaches 175% of the exemption amount, you no longer qualify at all. For a married couple earning $60,000, this distinction is academic. You’d pay zero federal income tax under either bill.
But for someone earning $120,000, the mechanics matter. Under Van Hollen’s plan, you’d pay a capped rate on income above the threshold. Under Booker’s, you’d get the deduction but still face normal bracket rates on everything above $75,000.
130 million Americans could get a tax cut, but the poorest may not
Van Hollen’s office estimates that roughly 130 million Americans would receive a tax cut under his proposal. The nonpartisan ITEP found that middle-income households earning between $27,000 and $153,000 would see an average tax break of roughly $1,000 to $1,300, according to its March 12 analysis.
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Yet, Booker’s plan is broader because the expanded standard deduction applies to everyone, even a household earning $300,000 would save money. The Penn Wharton Budget Model found that households in the $100,000 to $200,000 range receive the largest absolute tax cuts under the Keep Your Pay Act.
The gap that neither bill fills for the lowest earners
Here is the catch you should know about. Neither bill does much for the lowest-income Americans. The bottom 20% of households already owe zero federal income tax because the existing standard deduction and credits like the Earned Income Tax Credit wipe out their liability. You cannot reduce a tax bill that is already at zero by adding more deductions.
Chuck Marr, vice president for federal tax policy at the nonpartisan Center on Budget and Policy Priorities, told CBS News that the proposals are “poorly targeted” for helping the very poorest households. He noted that refundable tax credits are more effective at reaching those families because credits can generate a payment even when no tax is owed.
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ITEP confirmed this finding: the poorest 20% of households would not benefit from Van Hollen’s plan at all, CBS News reported.
Booker’s bill does include expanded Child Tax Credits and a larger Earned Income Tax Credit for childless workers, which would help some low-income households. The headline provision, the $75,000 standard deduction, mainly benefits people who earn enough to use it.
How each plan proposes to cover the cost
Tax cuts of this scale are not free. The funding strategies for these two bills are very different, and the price tags reflect that.
Van Houten’s millionaire surtax
Van Hollen’s plan is fully paid for, according to the Yale Budget Lab. It introduces a tiered surtax on income above $1 million for individuals and $1.5 million for married couples:
- 5% surtax on income above $1 million (individuals)
- 10% surtax on income above $2 million
- 12% surtax on income above $5 million
The Yale Budget Lab estimates this surtax would affect roughly 615,000 tax filers and raise approximately $1.46 trillion over 10 years, according to Van Hollen’s office. The bill would be budget-neutral over a decade.
Booker’s corporate tax and loophole closures
Booker’s plan carries a much larger price tag. The Yale Budget Lab estimates it would cost $5.3 trillion over 10 years, or about 1.4% of GDP.
Booker proposes paying for it by raising the corporate tax rate, closing tax loopholes used by the ultra-wealthy, increasing taxes on stock buybacks, and raising the top two individual income tax brackets to 41% and 43%, according to his Senate press release.
The Penn Wharton Budget Model puts the net revenue loss at approximately $5.0 trillion even after accounting for the top-rate increases. Booker has stated that additional corporate tax reforms would close the difference, but specifics have not been released.
Republicans control Congress, so what happens next
Neither bill is likely to advance right now. Republicans hold majorities in both the House and Senate, and the party is focused on defending the One Big Beautiful Bill Act, which it passed last year.
At a March 4 House Ways and Means hearing, Rep. Jason Smith of Missouri cited a waitress in his district who received a record refund of nearly $12,000 under the new law as evidence that the existing tax framework is working.
Marr of the Center on Budget and Policy Priorities acknowledged the political headwinds but said the proposals signal a real shift in how policymakers are thinking about taxation. New ideas get debated, refined, and sometimes resurface years later in different forms.
For you as a taxpayer, these bills are worth watching but not worth planning around today. No changes to your withholding, your filing strategy, or your retirement contributions should be based on legislation that has not passed.
What this debate actually means for your taxes going forward
Even if neither bill becomes law this year, the conversation they’re driving matters. The core question is straightforward: should the government tax income that people need just to cover rent, food, and healthcare? Both parties are now competing to answer that question, just through different mechanisms.
The One Big Beautiful Bill Act delivered targeted relief through deductions for tips, overtime, and seniors. These Democratic proposals go further by arguing that the entire cost of living should be a tax-free zone. Whether that idea survives politically, it is reshaping the debate about who the tax code should protect first.
Practical steps you can take right now
- Review your current withholding: If you received a large refund this year because of the One Big Beautiful Bill Act changes, update your W-4 with your employer so you keep more of your money throughout the year instead of waiting for a lump sum.
- Maximize the deductions you already qualify for: The 2026 standard deduction is $32,200 for married couples. Combine that with the $6,000 senior deduction if you’re 65 or older, and the SALT deduction cap of $40,400, and you may already be sheltering more income than you realize.
- Do not adjust your financial plan based on proposed legislation: These bills face an uphill climb. Make decisions based on current law, not political promises.
- If you earn below $50,000 as a household, check whether you’re claiming all available credits: The Earned Income Tax Credit and Child Tax Credit may already reduce your federal tax liability to zero or generate a refund.
Half of American workers paying zero federal income tax is a bold idea. Whether it’s a policy breakthrough or a campaign talking point depends entirely on what happens in Congress. For now, the smartest move is to make sure you’re taking full advantage of the tax breaks that already exist.
