No — the New Deal did not set a precedent for the tax policy enacted under the Trump administration in 2025. The two eras moved in opposite directions: Roosevelt's Congress raised top rates and estate taxes while building a new payroll-funded benefit system, whereas the One Big Beautiful Bill Act (OBBBA), signed July 4, 2025 as Public Law 119-21, locks in lower top rates and a larger estate exemption while cutting benefit spending.
That comparison matters beyond history class. The "New Deal precedent" argument gets used both ways — to claim today's tax law is business as usual, and to claim Washington has always taxed the rich harder. Neither holds up against the actual numbers, and the differences point to where your own household lands.
Table of Contents
- What the New Deal actually did to taxes
- Where the 2025 law points instead
- The pairing that reverses the precedent
- What the numbers do not cover
- Why "precedent" is the wrong frame anyway
- How to check where you stand
- Frequently Asked Questions
What the New Deal actually did to taxes
The Revenue Act of 1935, nicknamed the "Wealth Tax Act," raised the top individual bracket from 63% to 79% on incomes above $5 million. Congress projected only about $250 million in added annual revenue from the whole act — roughly $45 million from the surtax on the rich and about $80 million from estate taxes. The headline rate was dramatic; the revenue was modest. Those rate hikes sat on top of a tax base that was already regressive.
As tax historian Joseph Thorndike documents for the Tax History Project at Tax Notes, consumer-goods excise taxes supplied more than half of all federal revenue in fiscal 1933, and the New Deal's first significant tax innovation was a regressive food processing tax under the 1933 Agricultural Adjustment Act. The same Congress that passed the wealth tax also passed the Social Security Act of 1935, financed by a flat payroll tax of 1% each on employer and employee, applied only to the first $3,000 of wages, first collected in 1937 and scheduled to rise to 3% each. A flat tax capped at a low wage ceiling is regressive by design. The New Deal paired it with a new benefit that paid out to the same workers.
Where the 2025 law points instead
OBBBA's largest component makes permanent the temporary individual income and estate tax provisions of the 2017 Tax Cuts and Jobs Act and expands several of them, plus permanent full expensing for many business investments, according to the Brookings Institution's preliminary assessment published March 23, 2026. The resulting rates are nowhere near 1935 levels. For tax year 2026 the IRS sets the top individual rate at 37% on single filers above $640,600 and joint filers above $768,700, with the estate basic exclusion at $15,000,000, up from $13,990,000 for 2025 decedents.
That top rate is less than half the New Deal's 79%, and the estate exemption shields an amount Roosevelt-era law would have taxed heavily. The fiscal direction differs too. The Tax Foundation estimates the enacted law cuts federal revenue by $5.0 trillion over 2025–2034 on a conventional basis, with dynamic economic feedback trimming that loss about 19% to $4.1 trillion. The 1935 act was a revenue raiser, even if a small one.
The pairing that reverses the precedent
The sharpest break is not the rate table — it is what each law did with spending. The New Deal attached a regressive tax to a new social-insurance program. OBBBA's distributional picture runs the other way. The Congressional Budget Office's August 11, 2026 letter on Public Law 119-21 finds household resources decreasing toward the bottom of the income distribution and increasing in the middle and at the top.
The reported figures work out to roughly −$1,200 a year, or 3.1% of income, for the lowest decile, against +$13,600, or 2.7%, for the highest, averaged over 2026–2034. Those bottom-decile losses come mainly from Medicaid and SNAP reductions rather than from the tax provisions themselves, per a Thomson Reuters Checkpoint summary of the CBO letter. So the New Deal taxed broadly and spent on broad benefits; the 2025 law cuts taxes with gains concentrated at the top and reduces the benefit programs the lowest earners rely on. Calling the first a precedent for the second inverts what each one did.
What the numbers do not cover
Anyone citing these estimates should know their boundaries, because the limits are where most public arguments go wrong.
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- CBO's distributional work does not reflect additional debt-service costs or macroeconomic effects, a point the agency states in its own accompanying material. Interest on the added borrowing is a real cost that sits outside the table.
- Several widely circulated OBBBA estimates — including the Joint Committee on Taxation's −$3.94 trillion figure and the Yale Budget Lab's distributional run — model the May 2025 House version, not the signed law. Check which bill text an estimate used before quoting it.
- The −$1,200 and +$13,600 figures are decile averages over nine years, not a forecast for any individual household.
- Rate comparisons across eras are not apples to apples. The 1935 79% bracket applied above $5 million in 1935 dollars and reached very few filers; the deduction, exclusion and payroll-tax structures around it were entirely different.
Why "precedent" is the wrong frame anyway
New Deal tax structures proved reversible rather than self-entrenching. Roosevelt's 1936 undistributed profits tax — his most ambitious corporate-tax innovation, aimed at corporations hoarding earnings instead of paying them out — was destroyed in 1938 by a coalition of business leaders, Republicans and conservative Democrats, as Tax Notes' tax history coverage recounts.
That is the useful lesson for a reader watching current law. A tax provision labeled "permanent," as OBBBA's extended individual and estate provisions are, is permanent only until a later Congress changes it. Permanence in tax drafting means no scheduled expiration date, not political durability.
How to check where you stand
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- Find your 2026 bracket against the IRS figures above before assuming the law cut your taxes. The $640,600 single and $768,700 joint thresholds mark the top bracket only; most filers sit well below.
- If your household uses Medicaid or SNAP, treat eligibility and benefit changes as the item to track, not the rate tables — CBO attributes the bottom-decile losses to those programs.
- When you see an OBBBA cost or distribution number, look for whether it models the signed law or the May 2025 House bill. The two differ by hundreds of billions.
- For estate planning, note that the $15,000,000 basic exclusion applies to 2026 decedents and replaces the $13,990,000 figure used for 2025. Confirm which year governs before relying on an older worksheet.
Frequently Asked Questions
Did the New Deal tax the rich more than current law does?
Yes, at the top of the rate schedule. The Revenue Act of 1935 set a 79% top bracket on incomes above $5 million, while the IRS puts the 2026 top rate at 37%.
Was the New Deal's tax system progressive overall?
Not as a whole. Consumer excise taxes supplied more than half of federal revenue in fiscal 1933, and the 1935 Social Security payroll tax was a flat 1% each on employer and employee, capped at the first $3,000 of wages.
Does OBBBA raise anyone's taxes?
CBO attributes the resource losses at the bottom of the income distribution mainly to Medicaid and SNAP reductions rather than to the tax provisions themselves.
Are the 2025 tax changes locked in?
They have no scheduled expiration, which is not the same as being politically safe. Roosevelt's 1936 undistributed profits tax was repealed by 1938.
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