The 2026 Tax Cuts: How Much Could You Really Save?

The so-called “Big Beautiful Bill,” signed into law by President Trump on July 4, is poised to cut taxes for millions of Americans starting in 2026.

While every income group is expected to see some level of savings, a recent analysis by the Tax Policy Center suggests that the biggest benefits will go to higher-income households.

The law extends and expands many provisions from Trump’s 2017 Tax Cuts and Jobs Act, which were previously set to expire at the end of 2025, according to CBS News. But it doesn’t just preserve old cuts; it also adds new ones.

New Breaks, Big Savings—for Some

According to the Tax Policy Center, the average household is expected to save approximately $2,900 under the new law in 2026.

But as with most tax policy, the averages don’t tell the whole story.

While lower-income households may see modest gains, the biggest cuts are going to top earners. Approximately 60% of the total tax benefits will be allocated to the top 20% of earners, or those earning more than $217,000 per year, the center reports.

That’s because the new law not only extends existing cuts but also includes measures that disproportionately benefit higher earners, such as raising the cap on the state and local tax (SALT) deduction from $10,000 to $40,000.

How the Cuts Shake Out

Here’s how different income brackets are expected to fare in 2026:

Low-Income Households (Up to $34,600/year)
These households are expected to see average tax savings of around $150, according to the analysis. That’s about 0.8% of their income. The impact may be small, but still meaningful for families living paycheck to paycheck.

CBS News notes that eliminating taxes on tips and certain kinds of overtime pay could also put more money in workers’ pockets. This may be especially helpful for those in the service or hourly wage economy.

Middle-Income Households ($90,000–$130,000/year)
These taxpayers will likely save $1,800 to $3,000, depending on their family structure, deductions, and whether they qualify for credits like the Child Tax Credit. The savings represent around 1.5% to 2% of after-tax income.

Families in this group should evaluate how itemizing might become more valuable with the higher SALT cap and how dependent credits could increase their refund.

High-Income Households ($217,000+/year)
The top quintile may enjoy average savings of about $12,540—2.5% of their income. Households with significant income from tips, bonuses, or itemized deductions could save even more due to expanded exclusions and raised caps.

CBS News reports that this group will see the largest relative and absolute benefit under the bill.

What’s Actually Changing?

In addition to extending 2017 tax cuts, CBS News reports that the law:

• Eliminates federal taxes on tips and some overtime pay

• Raises the SALT deduction cap to $40,000

• Expands eligibility for the Child Tax Credit

• Maintains lower income tax brackets from the 2017 bill

Together, these changes are designed to boost take-home pay and reduce the tax burden across the board. But as the Tax Policy Center notes, “average tax cuts are generally larger as a percentage of after-tax income for higher income households.”

What You Can Do Now

While the cuts take effect in 2026, smart tax planning now can help you benefit later. Consider:

1. Adjusting your withholdings or estimated payments based on projected changes

2. Reviewing your eligibility for credits and deductions likely to expand

3. Timing certain income events—like bonuses or stock sales—around the law’s start date

4. Maximizing retirement contributions while current tax rates still apply

If you’re in a high-tax state, the new SALT cap may significantly shift whether itemizing deductions is worthwhile again.

As always, the specifics of your tax situation depend on many personal variables: your family size, where you live, whether you itemize, and more.

One Law, Many Reactions

Supporters argue these changes give relief to families across all income levels and stimulate the economy.

Critics argue that the law disproportionately benefits those who already earn the most, raising concerns about fairness and the potential long-term impact on federal revenues.

Regardless of your stance, these cuts are scheduled to take effect in 2026. By planning now, you’ll be better positioned to take full advantage.