Average American to see $3,752 tax cut in 2026 under new Trump tax law
The average American will see a tax cut of $3,752 in 2026 under the One Big Beautiful Bill Act, according to the nonpartisan Tax Foundation. The legislation, which President Trump signed into law last month, represents the most significant changes to federal tax policy since the 2017 Tax Cuts and Jobs Act, according to the foundation.
Among the most notable provisions are making permanent the individual tax changes first put in place in 2017; additional tax cuts to individuals and businesses, including new deductions for tips and overtime pay; an expanded child tax credit and standard deduction; a permanent 100% bonus depreciation and domestic research and development expensing.
The foundation expects federal tax reductions in every state next year, although in varying amounts.
- The states with the largest average tax cuts are Wyoming ($5,375), Washington ($5,372) and Massachusetts ($5,139).
- West Virginia ($2,503) and Mississippi ($2,401) will see the smallest average tax cuts.
At the county level, the largest average tax cuts will be in mountain resort towns. Teton County in Wyoming will see an average tax cut of $37,373 per taxpayer in 2026, followed by Pitkin County, Colo. ($21,363) and Summit County, Utah ($14,537). The smallest average tax cuts will be found in rural counties, such as Loup County, Neb., with an average tax cut of $824 in 2026.
The average tax cut will decline to $2,505 in 2030 as certain individual changes such as deductions for tips and overtime income expire, before rising again up to $3,301 in 2035 as inflation increases the nominal value of the permanent tax cuts.
The foundation further estimates that the legislation will create about 938,000 full-time equivalent jobs over the long run, ranging from more than 132,000 jobs in California and 81,000 in Texas to about 1,700 new jobs in Vermont.
The White House was quick to tout the Tax Foundation’s estimates.
“President Trump’s One Big Beautiful Bill is the largest, most consequential tax cut on the middle class ever,” Deputy Press Secretary Anna Kelly said. “Now, the Tax Foundation — the leading nonpartisan tax policy nonprofit — confirms that. Between lower inflation, massive investments and historic tax cuts, all Americans are reaping the benefits of the Trump economy — and the Golden Age has just begun.”
The Congressional Budget Office said the legislation will add $2.4 trillion to the U.S. national debt, it also raised the U.S. debt ceiling by $5 trillion.