Collapsing Income Tax Brackets
House bill H.4228 would condense the middle income tax brackets while leaving the highest and lowest brackets essentially unchanged. This bill would eliminate the 3, 4, 5 and 6% tax brackets and replace them with a single tax bracket at 3.75% applying to all incomes between $2,910 and $14,550. Unchanged is the 0% rate for incomes below $2,910 and the 7% rate for incomes above $14,550.
While this would be a tax cut, the fact that the top marginal rate of 7% will still kick in at such a low amount ($14,550) ensures that the average household savings from such a cut will be minimal.