With the cost of living continuing to put the squeeze on household budgets, U.S. Senator Cory Booker (D-NJ) is pitching a massive overhaul to the federal tax system. On Monday, Booker unveiled the Keep Your Pay Act, a new legislative proposal designed to give working and middle-class Americans a significant tax break by making the first $75,000 of their earnings completely tax-free.
For households married and filing jointly, this means paying zero federal income tax on the first $75,000 they bring home. Single filers and heads of households would also receive proportional tax relief. According to the Senator’s office, if enacted, the Keep Your Pay Act would slash the federal tax bill for the median American family by roughly 85 percent.
“New Jerseyans are working harder than ever, but they’re struggling to get by because they’re facing out of control costs and an economy that is stacked against them,” Booker stated in a press release. He emphasized that wiping out income tax on those initial earnings would instantly free up cash for everyday expenses, unexpected emergencies, and future savings.
Beyond the massive bump to the standard deduction, the Keep Your Pay Act includes aggressive expansions to existing tax credits aimed at working families and individuals. Building on previous legislative efforts, the plan boosts the Child Tax Credit to $3,600 for children aged six to 17, and $4,320 for children under six. It also introduces a $2,400 “baby bonus” during the year a child is born to help parents offset the steep upfront costs of a newborn. Furthermore, the credit would become fully refundable, ensuring lower-income families are not left behind.
The legislation also provides a significant boost to the Earned Income Tax Credit. For workers without children at home, the bill triples the value of the credit. It expands eligibility to include younger workers between the ages of 19 and 24, as well as older workers 65 and above, two demographics that are currently excluded from the full benefit.
A tax cut of this magnitude usually comes with a hefty price tag, but Booker’s proposal is designed to be fully paid for without adding to the national deficit.
The legislation targets the ultra-wealthy and large corporations by closing long-standing tax loopholes. To fund the working-class tax cuts, the Keep Your Pay Act proposes raising the corporate tax rate, strengthening corporate tax rules, increasing taxes on stock buybacks, and tightening limits on deductions for executive compensation.
To help voters visualize the potential impact on their own wallets, Booker’s team has launched an interactive tax calculator on his official website.
