Trump Tax Cuts and Tariffs Leave RI's Lowest-Income Households Struggling

The Trump administration's tax cuts and tariffs have left lower-income households in Rhode Island struggling to make ends meet. On July 4, 2025, Public Law 119-21 was signed into law, which included new deductions for tipped income and overtime pay. However, these deductions only reduce taxable income if workers already collect reported tips or work eligible overtime hours, and do not force employers to boost base hourly wages.

According to the Congressional Budget Office (CBO), households in the lowest income decile stand to lose an average of $1,200 a year from 2026 through 2034, while households in the highest decile gain an average of $13,600 annually. The CBO attributed these losses to reductions in safety-net transfers, specifically Medicaid and SNAP.

The tariffs imposed by the Trump administration have also increased prices on consumer goods, peaking in early 2026 according to the Federal Reserve. The Supreme Court later ruled that the International Emergency Economic Powers Act did not authorize the challenged tariffs, leading to refunds of over $770 million in tariff-related costs across local households and businesses.

In Rhode Island, where housing costs are high, the loss of $1,200 a year is significant. According to HousingWorks RI, 142,920 households statewide are already housing-cost burdened, spending more than 30% of their earnings on rent alone. The state's average private wage is $37.63 an hour, but top-line averages obscure what happens at the low end of the payroll scale.