Trump's Tax Law at One Year: The Winners and Losers Are Becoming Clear

The Average Household Tax Cut: $2,900

The One Big Beautiful Bill Act, signed into law by President Trump on July 4, 2025, turns one year old this week. According to analysis by the Tax Policy Center, a nonpartisan think tank, the average American household will see a tax reduction of approximately $2,900 in 2026 as a result of the legislation.

The law extended and in many cases made permanent the 2017 Tax Cuts and Jobs Act provisions that were scheduled to expire at the end of 2025, which would have resulted in tax increases for an estimated 62 percent of filers without the new legislation. It also added new tax benefits, including deductions for tip income and overtime pay, a $6,000 bonus deduction for taxpayers over 65, and an increase in the state and local tax deduction cap from $10,000 to $40,000.

Targeted Benefits for Specific Groups

Several provisions went directly to workers in specific situations. Approximately 28 million workers claimed the new overtime income deduction in 2026, with a typical deduction of about $3,100, according to the House Ways and Means Committee. About 7 million workers claimed the tip income deduction, with a typical amount of $7,000. Around 34 million seniors claimed the $6,000 bonus deduction, subject to income limits.

The law also permanently expanded 529 college savings plans to allow tax-free withdrawals for additional expenses including tutoring and K-12 educational materials, and it raised the annual limit on 529 distributions for K-12 purposes from $10,000 to $20,000 per year beginning in 2026.

Where the Tax Cuts Are Concentrated

The distribution of the law’s benefits is not uniform across income levels. According to Tax Policy Center analysis, approximately $6 of every $10 in tax reductions under the legislation go to the top 20 percent of households - those earning roughly $217,000 or more annually. Higher-income households receive the largest benefit in part because the law permanently preserved the 37 percent top individual income tax rate, which would otherwise have reverted to 39.6 percent.

A July 2026 poll from the Associated Press-NORC Center for Public Affairs found that more than six in ten adults said they believed the law would do more to help wealthy Americans than other income groups. About 60 percent said they expected the law to hurt low-income households.

SNAP Enrollment Drops 4 Million

Among the law’s spending reductions, the changes affecting food assistance and health coverage are among the most visible in the data so far. SNAP enrollment - the federal food assistance program - has dropped by more than 4 million people, or roughly 10 percent, since the legislation passed, according to the Center on Budget and Policy Priorities.

Electric vehicle sales also fell sharply after the law ended federal tax credits for EV purchases. Cox Automotive reported EV sales down 22 percent in 2026 compared with a year earlier. Several home energy credits, including those for rooftop solar and home efficiency improvements, were also eliminated or modified.

What Is Still Coming

A number of the law’s more significant provisions affecting lower-income households have not yet taken effect. New Medicaid work requirements are scheduled to begin in 2027. Urban Institute projections estimate those requirements could reduce Medicaid enrollment by between 5 million and 10 million people. ACA marketplace premium tax credit eligibility will also be narrowed for certain lawfully present immigrants with incomes below 100 percent of the federal poverty level, beginning in 2026.

The Congressional Budget Office has estimated the legislation will reduce federal revenue by approximately $5.2 trillion over ten years on a conventional basis. The full economic and household consequences of the law, particularly the Medicaid and ACA changes, are expected to become more visible through 2027 and beyond.

References: The One Big Beautiful Bill Act Is 1 Year Old. Here Are the Winners and Losers. | Here’s Your Potential Tax Cut in 2026 From the One Big Beautiful Bill Act