New 'Fair Share Tax' Hits $1M+ Earners: 30% Minimum Tax Starts in 2025

The Paying a Fair Share Act of 2025 introduces a brand-new federal tax specifically targeting the nation’s highest earners. Starting with tax years after December 31, 2024, if your Adjusted Gross Income (AGI) crosses the $1,000,000 mark, you’ll be subject to what the bill calls the “Fair Share Tax.” This threshold will be adjusted for inflation annually, but for now, that’s the magic number.

The Million-Dollar Club Tax Rate

So, what does this new tax actually do? It aims to set a floor on the tax rate for those million-plus earners. The core calculation is a tentative tax equal to 30 percent of the amount your AGI exceeds your “modified charitable contribution deduction.” This is where it gets a little complicated, but the bottom line is that the final amount you pay is the difference between this 30% tentative tax and the total of all the taxes you already pay—your regular income tax, the Alternative Minimum Tax (AMT), and your payroll taxes (SEC. 2).

Think of it like this: the government is checking to make sure that once you factor in all your deductions and credits, your overall tax rate doesn't dip below a certain level. If your existing tax burden (income, AMT, and payroll) is less than the 30% calculation, you pay the difference as the new Fair Share Tax. This is designed to ensure that even high-income taxpayers who benefit from extensive deductions still contribute a minimum amount.

The Catch in the Calculation

For most of us, the standard deduction is the easy choice. But for high earners, the bill introduces a wrinkle in the calculation tied to charitable giving. If you take the standard deduction, your “modified charitable contribution deduction” is automatically set to zero for the purpose of this new tax. This means the 30% calculation starts from your full AGI over $1 million, giving you no offset for charitable giving.

If you itemize deductions, however, the calculation uses a complex figure based on your itemized deductions before certain limitation rules kick in. For taxpayers who are already generous donors, this provision ties their ability to offset the new tax to the complexity of itemizing, potentially creating a compliance headache. In short, if you’re a high earner and you want to use charitable giving to reduce your liability under this new tax, you’ll need to itemize, which adds complexity and scrutiny (SEC. 2).

Beyond the Numbers: The Bigger Picture

Section 3 of the bill includes a “Sense of the House” resolution, which is essentially Congress stating its opinion on what should happen next. While this part isn't legally binding, it signals the intent behind the legislation. The House states that this new tax is just a quick, initial step to set a minimum tax level for the wealthiest and help cut the national deficit by billions annually.

The stated goal is to encourage lawmakers to pursue broader, more fundamental tax reform later on, specifically by getting rid of “unnecessary and unwarranted tax loopholes” and simplifying the system for regular folks and businesses. This bill, therefore, is framed less as a final solution and more as a down payment on a larger tax overhaul (SEC. 3). For the average person juggling bills, this section means lawmakers are acknowledging the current tax code is a mess—but whether they actually fix the whole thing remains to be seen.