The "Paying a Fair Share Act of 2025" imposes a new tax on high-income earners with an adjusted gross income over $1,000,000 to ensure they pay a fair share of taxes.
Brendan Boyle
Representative
PA-2
The "Paying a Fair Share Act of 2025" introduces a new tax on high-income taxpayers with an adjusted gross income over $1,000,000, referred to as the "Fair Share Tax". This tax aims to ensure wealthy individuals pay a minimum tax rate by calculating the difference between a "tentative fair share tax" (30% of adjusted gross income exceeding modified charitable contributions) and their regular tax liability. The bill intends to set a minimum tax level for high-income earners, reduce the deficit, and promote broader tax reform. The House expresses that Congress should reform taxes by eliminating unfair loopholes, simplifying the system, and ensuring wealthy taxpayers pay their fair share.
New 'Fair Share Tax' Targets Million-Dollar Earners with 30% Minimum Rate Calculation Starting 2025
This bill, the "Paying a Fair Share Act of 2025," introduces a new tax calculation aimed squarely at individuals, estates, and trusts with an adjusted gross income (AGI) exceeding $1 million per year. Effective for tax years beginning after December 31, 2024, it establishes what's called a "Fair Share Tax," designed to ensure these high earners pay a minimum effective tax rate.
Decoding the 'Fair Share Tax': Who Pays and How Much?
If your AGI tops the $1 million mark (an amount set to adjust for inflation starting in 2026), this bill triggers a new calculation. It's not a simple flat tax. Instead, it determines a "tentative fair share tax" equal to 30% of your AGI that's over the $1 million threshold (with a slight adjustment related to your charitable contribution deductions). Think of AGI as your gross income minus certain specific deductions. The core idea is to set a floor for tax liability.
The Fine Print: Calculations, Credits, and Complications
The actual "Fair Share Tax" you'd owe is the difference between that 30% tentative calculation and the sum of your regular income tax, any Alternative Minimum Tax (AMT), and specific payroll taxes already owed for the year (as defined in Section 2). Essentially, if your existing tax burden already meets or exceeds the 30% benchmark calculated under this bill's specific rules, you owe nothing extra under this provision. If it falls short, you pay the difference. This calculation, detailed in Section 2, adds a layer of complexity, particularly concerning how charitable deductions and payroll taxes factor in. Furthermore, the bill explicitly states this new tax liability cannot be used to boost eligibility for most other tax credits.
More Than Just Math: The Bigger Picture
Beyond the mechanics, Section 3 frames this Act as a step towards broader tax reform. The text expresses a desire from the House of Representatives to eliminate loopholes and ensure wealthier taxpayers contribute adequately, positioning this specific tax as a measure to set a minimum contribution level for top earners and potentially reduce the federal deficit. It suggests this is an interim step while pushing for more comprehensive changes to the tax code down the line.