Revenues
Impose a Surtax on Individuals' Adjusted Gross Income
CBO periodically issues a compendium of policy options (called Options for Reducing the Deficit) covering a broad range of issues, as well as separate reports that include options for changing federal tax and spending policies in particular areas. This option appears in one of those publications. The options are derived from many sources and reflect a range of possibilities. For each option, CBO presents an estimate of its effects on the budget but makes no recommendations. Inclusion or exclusion of any particular option does not imply an endorsement or rejection by CBO.
Billions of dollars | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | 2034 | 2025– | 2025– | |
Decrease (-) in the deficit | |||||||||||||
Impose a surtax of 1 percentage point on AGI above $20,000 for single filers and $40,000 for joint filers | -70.7 | -124.4 | -131.3 | -139.0 | -145.2 | -151.7 | -158.6 | -165.9 | -173.1 | -180.4 | -610.6 | -1,440.1 | |
Impose a surtax of 2 percentage points on AGI above $100,000 for single filers and $200,000 for joint filers | -49.5 | -89.1 | -94.2 | -101.2 | -105.8 | -110.8 | -116.3 | -122.1 | -127.9 | -133.9 | -439.8 | -1,051.0 | |
Data source: Staff of the Joint Committee on Taxation.
This option would take effect in January 2025.
AGI = adjusted gross income.
Adjusted gross income (AGI) consists of income from all sources not specifically excluded by the tax code, minus certain deductions called statutory adjustments. Those adjustments to income include a portion of the self-employment tax, certain contributions to retirement accounts, and interest on student loans. Under current law, AGI is not directly taxed. A narrower measure of income—taxable income—is subject to the individual income tax.
This option consists of two alternatives for imposing a surtax on AGI. Under the first alternative, a surtax of 1 percentage point would be imposed on AGI above $20,000 for single filers and $40,000 for joint filers. Under the second alternative, a surtax of 2 percentage points would be imposed on AGI above $100,000 for single filers and $200,000 for joint filers. After 2025, the thresholds for the surtax would be adjusted, or indexed, to include the effects of inflation.