• The proposed 39.6% tax bracket for incomes over $5 million has been omitted from the current tax bill.
  • The move preserves the TCJA's top rate of 37%, avoiding a $409 billion revenue increase over 10 years.
  • Wealthy taxpayers with AGI over $10 million would have seen only 32% of their income affected by the higher rate.

A Shift in Tax Policy Direction

President Trump's proposal to create a millionaire tax bracket—which would have reinstated a 39.6% rate for taxable incomes exceeding $5 million—has been left out of the current tax bill under consideration, according to sources familiar with the negotiations. The omission signals a departure from earlier discussions about targeting high earners as part of broader tax policy adjustments.

The proposal, had it been included, would have generated less than $8 billion annually from taxpayers with adjusted gross income above $10 million. About 68% of their income—including capital gains, qualified dividends, and amounts in lower brackets—would have remained unaffected by the higher rate.

The TCJA Countdown

With key provisions of the 2017 Tax Cuts and Jobs Act set to expire in 2025, lawmakers face mounting pressure to address the automatic reversion to higher rates. The current bill's structure suggests a preference to maintain the status quo rather than implement targeted increases for top earners.

"This was always more about political signaling than revenue generation," said one tax policy advisor who requested anonymity because they weren't authorized to speak publicly. "The practical impact would have been minimal without addressing preferential rates on investment income."

What Comes Next

The legislative process continues through budget reconciliation, which allows for expedited consideration in the Senate. Analysts note that preserving the 37% top rate could cost approximately $4.5 trillion over the next decade compared to allowing scheduled increases to take effect.

Attempts to reach spokespeople for the House Ways and Means Committee and Senate Finance Committee were unsuccessful by publication time. Market reaction has been muted, with most observers having anticipated the millionaire bracket's exclusion following recent committee markups.