Millions of Americans could keep their first $75,000 tax-free with new proposed tax reform

A new tax reform set to be tabled by Senator Cory Booker could significantly expand the standard deduction and lower taxes for low-and middle-income families. The bill, which the New Jersey senator plans to introduce in the Senate on Tuesday, will effectively raise the standard deduction to $75,000 for married couples and $37,500 for individuals, which is nearly double the current rates. The Democratic leader who is vying for the 2028 presidential candidacy says the bill will focus on alleviating the cost-of-living crisis, but he has yet to lay out the cost of the amendments.

“It’s a simple idea: American households don’t pay taxes on their first $75,000 of earnings,” Booker said in an exclusive interview with NBC News. He added that the reform will have a significant focus on raising the average income of Americans, and it will have profound implications on the tax system as more taxpayers will be encouraged to use the standard deduction rather than itemizing their income. Effectively, Booker's bill would set the standard deduction at $56,250 for a “head of household,” and raise the child tax credit to $4,320 per child under 6 years old, and $3,600 per child between 6 and 17 years old, with an additional $2,400 "baby bonus" for the year the child is born. “Americans are working harder and harder, and they’re making less and less relative to their parents and grandparents,” Booker told NBC. He added that the U.S. economy isn't working, so big ideas are needed to "redeem the dream of America.”

The idea of expanding the standard deduction has had bipartisan support for decades. In his previous term, President Donald Trump expanded the standard deduction as well, and his current term's One Big Beautiful Bill Act made it permanent while expanding other tax cuts. Last year, the standard deduction went up from $15,000 to $15,750 for individuals, and for married couples filing jointly, it went up from $30,000 to $31,500, both indexed for inflation. Furthermore, the child tax credit was also raised from $2,000 to $2,200 per child, according to CNBC. 

While the idea is popular, Congress is not expected to rewrite the tax code during the current session. Furthermore, the proposal that is certainly going to be expensive doesn't have a cost estimate yet. While Booker told NBC that his goal is to ensure that the costs are "fully paid for" by increasing taxes on high-earners and corporations, and closing all the loopholes with stricter "tax avoidance schemes", his bill doesn't lay out those provisions or any details of the schemes yet.

However, the bill represents the possible stance that Democrats may approach the next big elections with. “I think the Democratic Party needs to become the party again of big ideas that resonate. Donald Trump has put forward a lot of big ideas. He doesn’t follow through on them, but they resonated in his last election,” Booker told the publication. He added that he hasn't closed the door on the idea of running for the presidency again, but currently, he is focused on doing what the party needs.

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