January 26 marked the start of tax filing season, and 140 million taxpayers are once again gathering W-2s, logging into tax software, and bracing for the familiar anxiety of figuring out what they owe Uncle Sam. It’s never a fun process, but this year will be a little better for taxpayers and working families. Thanks to the One Big Beautiful Bill (OBBB), Americans are entering tax season with something they haven’t felt in a while: relief – and real savings.
For years, families have been squeezed by inflation, high interest rates, and the everyday cost of living. Groceries, gas, rent, and childcare expenses jumped, while paychecks struggled to keep up. Tax policy often made matters worse, layering complexity and hidden penalties onto an already burdensome system.
At its core, the law delivers broad-based tax relief that shows up clearly when Americans file their returns so Americans can keep more of what they earn. Congressional Republicans raised the standard deduction, increased the Child Tax Credit, and permanently locked in lower tax rates across the board. The OBBB also prevented the largest ever tax increase on the American people.
There are also new tax deductions added to the tax code, like no taxes on tips, seniors, and overtime. While these provisions add complexity to the code, there is no denying their political popularity. An ideal tax system cuts out deductions and ensures the lowest possible rates for all taxpayers, not certain groups.
Because of these changes the average filer will save almost $3,000 more on their taxes this year than last. Importantly, working families making between $15,000 and $30,000 will have their taxes cut by 21%, the largest of any income group, according to the House Committee on Ways and Means. All told, 99.9% of American taxpayers will get a tax cut.
The non-partisan Tax Foundation recently found, “relative to prior law in 2026, taxpayers will see an increase in after-tax incomes worth about 5.4 percent on average.” For a single mom earning $75,000, she’ll expect to save $3,500 when she files.
That’s a lot of money for people to save, spend, or invest. Plus, the IRS only recently updated their tax withholding schedules, so every worker is seeing higher biweekly paychecks for work done so far in 2026. That’ll immediately put more money in people’s pockets paycheck.
As Republicans plot a second major reconciliation bill, particularly one that is focused on deficit reductions, they would also be wise to explore additional tax cuts to help working families and make the tax code simpler. Cutting spending will reduce our deficits and reduce the amount of money the Federal Reserve needs to print, which ultimately is the main driver of inflation.
The OBBB also had a meaningful impact on the business side of the tax code to turbocharge President Donald Trump’s economy. Aside from keeping business tax rates competitive, Republicans delivered permanent 100% bonus depreciation for capital investments so businesses can immediately recover the costs associated with purchasing equipment or machinery. This may sound technical, but its impact is enormous. Investment is what drives productivity, and productivity is what drives higher wages.
When the tax code no longer penalizes investment by forcing companies to write off costs over many years, businesses are more likely to modernize, expand, and compete. The result is a more efficient economy and better-paying jobs, particularly for small businesses. There’s also a similar provision for Research & Development so innovative firms can deduct these costs immediately, which has long been a bipartisan goal.
Together, these changes will boost our economy, lead to higher wages, and create almost one million full-time jobs across the country. Of course, these benefits might not reach their full potential because of a disruptive trade strategy that continues to foster uncertainty among businesses and consumers. The sooner businesses have stability and predictability on that front; the sooner our country will maximize the economic impact from the OBBB.
Tax season will never be anyone’s favorite time of year. But for the first time in almost a decade, American taxpayers will experience a less taxing process. As returns are filed and refunds arrive, one thing is clear: this year, tax filing season is a long-overdue win for American taxpayers – and we should all thank Congressional Republicans and President Trump for making it happen.
