The 'Fair Share Tax' Kicks Off in 2025: What the New 30% Minimum Tax Means for Million-Dollar Earners

The “Paying a Fair Share Act of 2025” introduces a brand-new tax bracket for the highest earners, officially called the “Fair Share Tax.” Starting with the 2025 tax year, this new levy targets individuals, estates, and trusts whose Adjusted Gross Income (AGI) crosses the $1,000,000 mark. The goal is straightforward: ensure that the wealthiest taxpayers maintain a minimum effective tax rate, regardless of how many deductions or credits they currently use to reduce their bill.

The Million-Dollar Question: Who Pays?

If your AGI is above that $1 million threshold (which gets adjusted for inflation starting in 2026), you’re considered a “high-income taxpayer” under this Act. The tax calculation is a bit like a safety net for the IRS. First, the law calculates a tentative tax equal to 30% of your AGI, minus a specific deduction for charitable giving. Crucially, you only pay the Fair Share Tax if that 30% tentative amount is higher than what you already owe in regular income tax, the Alternative Minimum Tax (AMT), and payroll taxes combined. Think of it as a floor—if your current tax bill is already high enough, this new tax doesn’t affect you. But if you’ve used deductions to drop your effective rate below that 30% floor, this tax kicks in to make up the difference (SEC. 2).

The Complex Math of Giving

One of the trickiest parts of this bill involves charitable giving. When calculating that 30% tentative tax, you can subtract a “modified charitable contribution deduction.” If you take the standard deduction on your taxes—which most people do—that modified deduction is zero. You get no break for your giving under this new tax calculation. If you itemize, the calculation is complex; it’s based on the portion of your charitable giving that remains after other deduction limits are applied (SEC. 2, Understanding the Tentative Tax Calculation). This adds a layer of complication for high-income philanthropists who itemize, and it completely negates the benefit of giving when calculating this specific tax for those who use the standard deduction.

More Than Just a Tax: A Congressional Wish List

Beyond the actual tax mechanism, the bill includes a “Sense of the Senate” section that acts as a mission statement for future tax reform (SEC. 3). While this section doesn't change any laws, it signals that Congress views the Fair Share Tax as a temporary “floor” for minimum tax rates. The Senate resolution states that Congress should pursue broader reforms to simplify the tax code, eliminate unnecessary loopholes, and ensure the wealthy pay their “fair share.” They believe this Act is a starting point that will immediately help cut the national deficit, paving the way for more fundamental changes later on. For busy people, this means two things: first, a new, complex tax is coming for the highest earners; and second, this is likely just the beginning of a larger conversation about tax reform.