Tax filers will see an average cut of $3,813 in 2026 under the One Big Beautiful Bill Act, according to analysis from the Tax Foundation, reflecting a significant shift in federal tax policy following the law’s enactment in July 2025.
Quick Facts
- Average tax cut per taxpayer: $3,813 in 2026
- Individual tax changes reduce liability by $2,272 on average, with business tax cuts adding $1,541
- Law signed into law July 4, 2025, makes permanent the 2017 Tax Cuts and Jobs Act provisions
- New deductions include tipped income, overtime pay, and enhanced senior deductions
The One Big Beautiful Bill Act represents the most significant legislative change to federal tax policy since 2017, according to the Tax Foundation. The law makes permanent the individual income tax rates and brackets from the Tax Cuts and Jobs Act, which were previously set to expire, avoiding what would have been a substantial tax increase for millions of filers.
Beyond extending prior tax cuts, the law adds new provisions designed to reduce tax burdens across income groups. The standard deduction increased to $16,100 for single filers and $32,200 for married couples filing jointly for tax year 2026. The law also expanded the child tax credit to $2,200 per child and created new deductions for workers who earn tips or overtime pay.
Tax cuts average $3,813 per filer in 2026 under new law
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How the Tax Cuts Break Down
The $3,813 average tax cut combines cuts from both individual income tax changes and business tax provisions. Individual tax changes contribute an average of $2,272 per taxpayer, while business tax cuts add another $1,541 per person on average, according to Tax Foundation modeling.
The tax benefits vary significantly by state and income level. Wyoming, Washington, and Massachusetts see the largest average tax cuts in 2026, while West Virginia and Mississippi see the smallest. High-income earners and business owners in certain areas receive substantially larger cuts than lower-income workers, reflecting differences in how the tax code affects various income sources and deductions.
The law also affects seniors with a new enhanced deduction and eliminates miscellaneous itemized deductions while increasing the cap on state and local tax deductions to $40,000 through 2029. These changes take effect for the 2026 tax year, meaning filers will see the impacts when they file their 2026 returns in early 2027.
Sources
- Tax Foundation — Average tax cut of $3,813 per taxpayer in 2026, breakdown of individual and business tax changes, state-level variation, and methodology for analysis
- IRS — Confirmation that One Big Beautiful Bill Act was signed into law July 4, 2025, and details on inflation adjustments for 2026 tax year
- TurboTax — Confirmation of law’s July 4, 2025 enactment and overview of tax law changes
- U.S. Bank — 2026 standard deduction amounts for different filing statuses
