President Trump’s major tax overhaul, signed into law last year, is facing criticism from middle-income households who say the promised relief has fallen short of expectations. While the administration highlights rising average tax refunds as proof of the bill's success, many service-industry workers report that caps on key deductions have blunted the impact of the changes.
Sherie Cummings, a Las Vegas cocktail waitress with two decades of experience, expected a significant boost from the administration’s pledge to eliminate taxes on tips. Despite she and her husband earning roughly $60,000 in tips last year, their refund failed to meet projections. The couple learned their deduction for tip income was capped at $25,000.
“I feel like a lot of the servers, bartenders, waitresses, tip earners were gaslit by the ‘no tax on tips,’” Cummings said. She described the resulting refund as minor relief that failed to address their financial pressures.
Wealth gap in tax savings
Data from the IRS indicates the average tax refund this season reached $3,521, an increase of roughly $350 over last year. President Trump defended the legislation during an April 1 address, claiming that citizens are receiving larger windfalls than they previously thought possible.
However, tax policy analysts note that the structure of the law provides disproportionately large benefits to the highest earners. According to the Tax Policy Center, roughly 60% of the total tax savings from the law are projected to flow to the top 20% of households, defined as those earning more than $217,000 annually.
While middle-class families navigate deduction caps, wealthier taxpayers are utilizing new provisions that favor capital-intensive investments. For instance, the law allows private jet buyers to deduct the full cost of aircraft from their taxes in the year of purchase, provided the jet is used for business at least 50% of the time.
“There are benefits for even taxpayers who are at lower or more moderate income levels, but as a whole, there’s certainly more tax cuts as you get higher and higher up the income levels,” said Shai Akabas, vice president of economic policy at the Bipartisan Policy Center.
Other groups are finding themselves entirely excluded from specific tax breaks. Railroad workers and truck drivers often do not qualify for the overtime tax savings touted by the White House, while Social Security deductions exclude both the lowest and highest earners. As the tax season concludes, the disparity between the administration's rhetoric and the reality for many service workers remains a point of friction.
