Senator Cory Booker has introduced the "Keep Your Pay Act," a bold legislative proposal designed to dramatically reshape the U.S. tax system. This initiative aims to significantly reduce the federal income tax burden for low- and middle-income families by more than doubling the standard deduction. If enacted, most households earning up to $75,000 would be exempt from federal income tax, a move that could profoundly impact the financial well-being of millions of Americans.
The "Keep Your Pay Act" is comprehensive, extending beyond just the standard deduction. It seeks to bolster support for families through an expanded child tax credit, increasing it to $3,600 for children aged 6 to 17 and $4,320 for those under 6. Additionally, the plan introduces a novel $2,400 "baby bonus" for new parents in the year of their child's birth, providing crucial financial assistance during a period of increased expenses. The proposal also broadens eligibility for the Earned Income Tax Credit, further aiding working families.
Senator Booker emphasizes the core philosophy behind the act: to ensure that hard-working Americans retain more of their earnings. He passionately stated that no family should pay income tax on their initial $75,000, underscoring the importance of allowing families to keep their money. He also highlighted the increased child tax credit as a measure to support parents in raising children in America.
The current standard deduction, as revised by the "One Big Beautiful Bill Act" of 2025, stands at $32,200 for married couples filing jointly. Booker's proposal would push this figure to an unprecedented $75,000, marking a substantial increase. This change is projected to shift a significant portion of after-tax income towards low- and middle-income households, potentially stimulating consumer spending and economic growth.
To finance these sweeping tax reductions and expanded benefits, the "Keep Your Pay Act" outlines several revenue-generating measures. These include increasing the corporate tax rate, fortifying existing corporate tax regulations, raising taxes on stock buybacks, and imposing stricter limits on executive compensation deductions. Furthermore, Senator Booker has indicated that the bill would introduce a tax hike for the top two marginal income tax brackets, specifically raising the 35% and 37% rates to 41% and 43%, respectively.
According to an analysis by the Penn Wharton Budget Model, the proposed legislation is estimated to cost the federal government approximately $6.4 trillion over a decade. However, the inclusion of tax increases for the top income brackets is expected to offset this cost by $1.4 trillion, reducing the net expenditure to $5 trillion. The Penn Wharton analysis suggests that low-income households would be the primary beneficiaries, experiencing the largest percentage increase in after-tax income. Conversely, the wealthiest 1% of taxpayers would see a minor reduction in their after-tax income, reflecting a fundamental reallocation of economic resources.
This ambitious proposal from Senator Booker aims to create a more equitable tax system, directly benefiting those who need it most, while addressing the fiscal impact through adjustments to corporate and high-income taxation.