As lawmakers look to the 2026 midterm elections, tax relief is back in the conversation. Two new proposals aim to lower taxes for low- and middle-income households by reducing how much income is taxed in the first place. Both plans have different approaches, but they both want to shift more of the tax burden onto high earners. Read on for an overview of both plans and who would actually benefit from them.

Sen. Booker’s “Keep Your Pay Act”

Senator Cory Booker recently introduced the “Keep Your Pay Act,” which would raise the standard deduction for joint filers from $32,200 to $75,000. Single filers would get a $37,500 deduction, up from $16,100.

That means a large portion of income would be protected from federal taxes. That could significantly lower tax bills for low and middle-income households.

But Booker doesn’t stop there. The “Keep Your Pay Act” includes additional family-focused tax benefits:

• Enhanced Child Tax Credit: An increase from $2,200 to $3,600 per child aged 6 to 17 and $4,320 for children under six years old.
• Newborn bonus: A new child tax credit of $2,400 the year the child is born
• Earned income tax credit (EITC) expansion: An increase for childless workers from about $660 to $1,500. It would also remove the 25-64 age restrictions and expand credit eligibility to begin at age 19.

To pay for this, Booker proposes increasing taxes on higher-income households. The top federal income tax rates would rise from 35% and 37% brackets to 41% and 43%, respectively. His plan also includes raising the corporate tax rate and increasing the stock buyback excise tax, though details are still limited.

The Working Americans’ Tax Cut Act

Sen. Chris Van Hollen and Rep. Don Beyer proposed a competing plan called Working Americans’ Tax Cut Act (WATCA). This plan would eliminate income taxes on lower-income workers through an “alternative minimum tax” system.

Under WATCA, single filers would pay no federal income tax on the first $46,000 they earn, while married couples filing jointly would be exempt from federal income tax on the first $92,000. To qualify, taxpayers’ income must be at or below 175% of the exemption. This works out to around $85,000 for individuals and $161,000 for couples.

Eligible taxpayers would calculate their taxes two ways and pay whichever is lower: under the current tax code or a flat 25.5% rate applied only to income above the $46,000 and $92,000 thresholds.

To fund the plan, Van Hollen proposes a tiered surtax on high earners: a 5% surtax on incomes above $1 million (or $1.5 million for joint filers), 10% above $2 million (or $3 million for joint filers), and 12% above $5 million (or $7.5 million for joint filers).

Like Booker’s plan, the goal here is to shift the tax burden to high earners while easing pressure on low- and middle-income earners.

Who Actually Benefits?

Both plans aim to help working households, but the impact wouldn’t be the same for everyone. Some experts argue that middle- and upper-middle-income households would actually see the biggest savings. These taxpayers have enough taxable income to benefit from larger deductions or exemptions, whereas lower-income households often have little federal income tax liability to begin with.

For now, these tax plans are just proposals, and they would need broad political support to move forward. But ahead of the 2026 midterm elections, both proposals signal the direction Democrats want to take on tax policy.