The new Big Beautiful tax law signed by President Trump in July will cut taxes for millions of Americans beginning in 2026.
According to a Tax Foundation analysis reported by CBS News, the typical tax filer may see a reduction of $3,752. But the averages vary widely by state. Residents of Wyoming are projected to save $5,374, on average, while those in Mississippi may see less than half that amount.
These contrasts make it easy to think your state determines your tax cut. In reality, the law does not favor one state over another. The real drivers are income levels and how local tax structures interact with the new provisions.
Why state averages can mislead
Tax Foundation data shows the largest average cuts in states like Wyoming and Washington, while Mississippi and West Virginia see the smallest. The gap is not due to state borders, but rather because higher-income households receive larger cuts.
States with a higher concentration of high earners, such as business owners in Wyoming, skew the average upward. In Mississippi, where the median income is around $55,000 compared with the national median of $80,600, most households qualify for smaller breaks.
Geography plays a role only when local tax structures interact with income. For example, the higher cap on state and local tax (SALT) deductions benefits wealthier households in high-property-tax states like New Jersey and New York, but only if they itemize.
Individual circumstances matter more
Nationally, the top 1 percent of earners making more than $1.1 million will receive an average tax break of $75,410 in 2026. By contrast, the bottom 20 percent, with incomes under $36,000, will average just $150, while middle-income households will see about $1,780. These figures are far more telling than the state comparisons when estimating your own outcome.
The law includes targeted provisions that can make a big difference for certain workers. Service employees may benefit from the “no tax on tips” rule, while those logging extra hours gain from the “no tax on overtime” rule. For example, a Mississippi server earning $30,000 in wages plus $10,000 in tips could see a bigger relative break than an office worker in Wyoming who cannot claim these exemptions.
Garrett Watson of the Tax Foundation told CBS News that taxpayers who do not qualify for tips, overtime, or new deductions such as car loan interest may see smaller benefits overall. That makes careful record-keeping and planning essential.
Making the most of your money
State averages make for splashy headlines, but they will not decide your refund. What matters is how you plan for the new rules and manage your earnings and income overall. The Big Beautiful provisions deliver different outcomes depending on income, deductions, and record-keeping. Now is the time to prepare for the future, whatever it holds.
- Put your emergency savings to work. SoFi Checking pays a competitive APY on savings, plus a cash bonus for new members who set up direct deposit. (May change without notice.)
- Review your W-4 withholding to avoid surprises.
- Track tips and overtime carefully if you qualify for the new exemptions.
- If you have over $100,000 in savings, professional advice may pay for itself. SmartAsset offers a free service that matches you to a vetted, fiduciary advisor in less than 5 minutes.
- Consider bunching charitable donations or medical bills in one year and taking the standard deduction the next.
- Add a small stream of extra income. This company's members take surveys in their free time and collectively earn over $55,000 daily.
- Max out retirement contributions if your income allows.
- Consult a CPA if you are self-employed or own a business — expert advice may capture breaks you would miss on your own.
- If you are carrying more than $10,000 in unsecured debt, you may want to consider getting help. National Debt Relief is a trusted source for free advice and assistance.
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Do not assume that the state average applies to you. Geography only shapes outcomes through local tax systems and income distribution. Your refund will reflect your own financial situation.
Prepare now, and you will be better positioned to strengthen your finances and make the most of the opportunities this new law creates.
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