Your first paycheck of 2026 will probably contain a pleasant surprise: more money. The Working Families Tax Cut (aka the One Big, Beautiful Bill Act) reduced taxes for working- and middle-class families, leading to whopping savings and paycheck boosts starting now.

Americans can look forward to keeping more of their earnings as bigger tax cuts lead to bigger refunds this year and bigger paychecks going forward.

Bigger Tax Cuts

The OBBBA made many individual and small business provisions of the 2017 tax cuts permanent, expanded upon them, and added new savings for working Americans.

As a result, federal income taxes will be slashed by

  • about 15% for households earning less than $50,000
  • 12% for those earning $50,000 to $100,000
  • 10% for those earning above $100,000 to half a million dollars

These are undeniably working-class and middle-class tax cuts.

Bigger Paychecks

The One Big, Beautiful Bill prevented $2.7 trillion in tax increases—the largest in American history—from taking place. The expiration of the 2017 tax cuts (passed exclusively by conservatives) was set to expire at the end of 2025, hiking up taxes by $1,700 on average for a family of four.

Instead, Americans will enjoy real wage increases and greater take-home pay, which the White House Council of Advisors projected to be between $7,600 and $10,900 annually for a decade.

You can search your state to find the savings ranges where you live. 

Bigger Refunds

Americans can expect a bigger refund this tax season thanks to the One Big, Beautiful Bill. Prescient Trump has promised that this season will be the “largest tax refund season of all time.”

Typically, we view bigger tax refunds with skepticism, because they’re signs that Uncle Sam has taken more out of our paychecks in taxes all year long, interest-free, and only returns our money to us when we file tax returns.

This time, bigger refunds are due to the OBBBA making tax changes retroactive to the start of 2025. This tax cut bill reduced individual income taxes for 2025 by an estimated $144 billion, according to the Tax Foundation. The IRS did not adjust withholding tables after the law passed, so withholdings from employee paychecks were not adjusted for the year but continued at the previous level. Workers will get the difference in their tax refunds.

White House Economic Advisor Kevin Hassett explained:

So we are going to see the biggest refund cycle ever in the history of America, and people are going to get massive refund checks.

Furthermore, two specific groups of workers will benefit most: tipped employees and overtime earners. 

For the typical person who’s a tip worker or gets overtime pay, we’re expecting just that part of it alone to be worth a couple thousand-dollar refund.

The key provisions that have made these savings possible include:

Seven major tax cuts took effect for 2025 under the OBBBA:

  • Child Tax Credit increased by $200 to $2,200 per child
  • Standard deduction increased by $750 for single filers and $1,500 for joint filers
  • State and local tax (SALT) deduction cap increased by $30,000 to $40,000 for taxpayers earning under $500,000
  • New $6,000 additional deduction for seniors
  • New $10,000 auto loan interest deduction 
  • New deduction for up to $25,000 in tip income 
  • New deduction for up to $12,500 in overtime income 

There are specific income limits and phase-outs for each benefit.

Learn more about the benefits of the One Big Beautiful Bill on our resource page: Earn More, Pay Less, Grow.