When President Donald Trump signed the One Big Beautiful Bill Act of 2025 into law, millions of taxpayers likely breathed a sigh of relief.
Had it not become law, 62% of U.S. filers would have seen their tax rate increase, according to a recent analysis by the Tax Foundation.
The One Big Beautiful Bill Act made permanent many of the tax changes from the Tax Cuts and Jobs Act of 2017. The 2025 law also created a host of new tax cuts.
Ultimately, where you live will play a major role in how much the new law affects you. That is because some provisions of the law impact different places in different ways.
For example, the new law increased the amount of state and local taxes that can be deducted from $10,000 to $40,000. This helps residents of areas with high property taxes more than residents of low-property-tax areas.
On average, federal income taxes for individual taxpayers will fall in every state in 2026 thanks to the new legislation, according to the Tax Foundation analysis. The three states where residents can expect the biggest plunge in their 2026 federal income taxes are:
- Wyoming: Average decrease of $5,375 per individual taxpayer (compared with what their taxes would have been had the One Big Beautiful Bill Act not become law)
- Washington: $5,372
- Massachusetts: $5,139
The states where residents can expect the smallest average tax cut are West Virginia ($2,503) and Mississippi ($2,401).
In terms of U.S. counties, the following three places — which the Tax Foundation notes are all located in “mountain resort towns” — will see the biggest tax cut on average:
- Teton County, Wyoming: Average decrease of $37,373 per individual taxpayer (compared with what their taxes would have been had the One Big Beautiful Bill Act not become law)
- Pitkin County, Colorado: $21,363
- Summit County, Utah: $14,537
The large size of the cuts in those places is likely due to the fact that many business owners and higher-earning taxpayers live there.
By contrast, the smallest average tax cuts tend to be found in rural counties, with Loup County, Nebraska, recording the smallest average tax cut of all, at just $824.
When taking all individual tax filers throughout the country into account, the average tax cut per taxpayer will be $3,752 in 2026, according to the Tax Foundation.
However, some of the tax breaks in the new legislation — such as the deductions for tips and overtime pay and for seniors — will expire in a few years. Because of this, the national average tax cut is expected to fall to $2,505 in 2030.
The national average tax cut eventually will rise again to $3,301 in 2035 as the permanent tax cuts in the new federal law increase in value due to inflation adjustments, according to the Tax Foundation.
Add a Comment