Americans across the country are set to see substantial tax relief in 2026, with the average taxpayer saving $3,752 thanks to President Trump’s sweeping One Big Beautiful Bill Act (OBBBA), according to a new analysis from the Tax Foundation.
The 870-page legislation, which President Trump signed into law on July 4th, makes permanent the 2017 Tax Cuts and Jobs Act provisions while adding significant new deductions. Most notably, the bill eliminates taxes on tips, overtime pay up to $12,500, and Social Security benefits, while expanding child tax credits and increasing small business tax deductions.
What’s in the Bill?
The OBBBA represents one of the most comprehensive tax reform packages in recent years, touching nearly every sector of the American economy. It permanently extends the nearly doubled standard deduction from the TCJA and increases the qualified business income deduction percentage from 20% to 23%, according to a Ways and Means Committee document.
For higher earners, the bill increases the SALT (state and local tax) deduction from $10,000 to $40,000, though this benefit phases out for taxpayers making over $500,000, as outlined by the American Progress Center.
Perhaps most striking for working Americans is the elimination of taxes on tips and overtime income. “The bill’s provision on cutting taxes on overtime, up to $12,500 a year, means more money in the pockets of our hardest-working Ohioans. Overtime taxes are essentially a tax on production, since labor is such a big cost in making things right here at home,” noted one economic analyst.
The legislation also significantly expands estate tax exemptions, increasing them to $15 million for singles and $30 million for married couples starting in 2026, with future inflation adjustments.
Regional Impact
The tax cuts aren’t distributed equally across the country, with some regions seeing substantially higher benefits. Nevada residents will receive among the largest tax reductions nationwide, with an average cut of $4,220 per filer in 2026. Washoe County residents will fare even better, seeing an average reduction of $6,313, according to the Reno Gazette Journal.
Florida’s Miami-Dade residents will receive an average tax cut of $5,872, while nearby Broward County will see cuts averaging $4,441. But it’s Collier County that hits the jackpot with one of the highest average cuts in Florida at a whopping $14,315, as reported by Axios Miami.
What about the heartland? Iowa taxpayers will see average 2026 tax cuts ranging from $2,311 in Appanoose County to $4,330 in Dallas County. Both Senators Chuck Grassley and Joni Ernst praised the bill, with Ernst saying it will “keep more money in people’s pockets,” according to Des Moines Axios.
In Michigan, taxpayers will save an average of $3,151 in 2026, with county-specific savings ranging from $2,430 in Genesee County to $5,006 in Oakland County, The Midwesterner reports.
Jobs and Economic Impact
Beyond immediate tax relief, the OBBBA is projected to create nearly one million new jobs nationwide, according to White House estimates. The Tax Foundation specifically projects about 938,000 full-time equivalent jobs over the long run.
In Ohio alone, the legislation is projected to boost wages by $3,400 to $6,100 over four years and increase take-home pay for a typical family with two children by $7,000 to $9,800, while protecting some 232,000 jobs, according to the Council of Economic Advisers data.
North Carolina’s economy should see substantial growth too, with more than 26,000 jobs forecast to be added in the state as a direct result of the tax package, The Mountaineer found.
Business advocates have been particularly pleased with provisions making the 20 percent qualified business income deduction permanent. “It’s a game-changer for businesses,” said one chamber of commerce representative, who also highlighted the expanded employer-provided childcare tax credit as addressing “one of the biggest hurdles to getting people into the workforce and keeping people in the workforce,” according to the Greenville Online.
Who Benefits Most?
The tax cuts appear to target middle-class blue-collar and service-sector workers with specific relief provisions. The no-tax-on-tips provision will benefit approximately 5% of the workforce, while about 2.1 million seniors will gain from the elimination of taxes on Social Security benefits, the Ohio Press Network notes.
In Virginia, Richmonders will see an average federal tax cut of nearly $3,500 in 2026, with particular benefits for families through the expanded child-care credit, Axios Richmond reports.
Middle Tennessee taxpayers also stand to benefit significantly under the bill, which not only makes the 2017 tax cuts permanent but adds substantial deductions on tips, overtime pay, provides tax relief for seniors, and expands the child-care tax credit, according to the Columbia Daily
