In a surprising shift that challenges traditional Republican fiscal orthodoxy, President Donald Trump has instructed congressional Republicans to consider raising taxes on the highest earners as part of his expansive “big, beautiful bill.” According to individuals familiar with the discussions, Donald Trump is advocating for the creation of a new 39.6% tax bracket targeting individuals with incomes exceeding $2.5 million, or couples earning over $5 million.

Congress is currently grappling with the impending expiry of the reduced tax rates established under Trump’s 2017 Tax Cuts and Jobs Act, scheduled to lapse at the end of this year.

In recent conversations with House Speaker Mike Johnson, Donald Trump emphasised the need to raise taxes on some of the wealthiest Americans.

Washington Post reported that administration officials have explored various options, including reverting the top marginal tax rate to Barack Obama-era levels. Treasury Secretary Scott Bessent has also proposed introducing a fresh tax bracket for those earning above $5 million annually.

The president’s request was formally conveyed during a phone call with Speaker Johnson on Wednesday.

In addition to the new tax bracket, Donald Trump reiterated his intention to abolish the carried interest tax break, a provision that benefits venture capital and private equity fund managers.

If enacted, the 39.6% rate would mark the highest top marginal tax rate since prior to the 2017 tax reforms, surpassing the current 37% threshold applied to individuals earning more than $626,350, or $751,600 for married couples filing jointly.

Further measures under consideration include closing loopholes that presently allow investment fund managers to enjoy preferential tax treatment and imposing higher taxes on owners of major stadiums and arenas.

These proposals form part of Donald Trump’s broader strategy to finance a multi-trillion-dollar legislative package he has dubbed the “one big beautiful bill,” aimed at extending the 2017 tax cuts permanently.

Republican lawmakers face mounting pressure to constrain the overall cost of this package, particularly as internal divisions persist over proposed cuts to entitlement programmes such as Medicaid, which provides health coverage for low-income Americans.

By increasing taxes on top earners, the party hopes to create fiscal space to preserve key elements of Donald Trump’s tax agenda, including the elimination of levies on tips and overtime pay.

Earlier President Donald Trump had said he ‘loves Millionaire Tax’.

Recently, Donald Trump reiterated another desire, to allow deductions of interest on loans for purchases of American-made automobiles.

But that list of priorities has a hefty price tag — as much as $11.95 trillion over 10 years, according to the nonpartisan Committee for a Responsible Federal Budget — sparking tension within the GOP ranks between Trump loyalists and fiscal hawks.

Some Republican House members from California and the Northeast have also been pushing to raise the cap on how state and local taxes can be deducted from federal returns, another expensive priority that fiscal conservatives dislike.