With the U.S. midterm elections approaching, Republicans are highlighting President Donald Trump's One Big Beautiful Bill Act as a central accomplishment. Treasury Secretary Scott Bessent said that more than 64 million tax returns had claimed at least one of the law's major new tax breaks as of this week. The benefits, however, vary widely by household. Income, filing status, family structure and eligibility for specific deductions all influence the size of the tax reduction.
Also known as the Working Families Tax Cuts, the law permanently extends several provisions of Trump's 2017 Tax Cuts and Jobs Act. It also introduces deductions for tip income, overtime pay, seniors and car-loan interest, while raising the cap on the state and local tax, or SALT, deduction.
The 2017 tax cuts remain the biggest factor
The Tax Foundation estimates that roughly 62% of Americans could have faced a tax increase in 2026 if the relevant 2017 provisions had expired at the end of 2025. The new law makes several measures permanent, including lower tax brackets, a higher standard deduction, a more generous child tax credit, and larger estate and gift tax exemptions.
Garrett Watson, vice president of federal tax policy at the Tax Foundation, said the extension of these existing provisions represents a substantially larger benefit in dollar terms than the newly created deductions. He also noted that much of the law preserves the existing tax structure. For many taxpayers, the practical effect is therefore not a new payment, but avoiding a tax increase that might otherwise have occurred.
Joseph Rosenberg, a senior fellow at the Urban-Brookings Tax Policy Center, said the law's provisions affect households differently. A family's sources of income and the way it files its tax return will directly determine the result.
Tip and overtime breaks target specific workers
The tax-free treatment of tip and overtime income that Trump proposed during the 2024 presidential campaign has now been enacted. The deductions generally begin to phase out once income reaches certain thresholds, meaning they are concentrated among taxpayers who qualify and actually receive tip or overtime income.
The Treasury's latest data show that the average reported tip deduction exceeded $7,000, while the average new deduction claimed by seniors exceeded $7,500. The car-loan interest deduction is similarly targeted: only qualifying vehicle purchasers can claim it, leaving out households without an eligible loan or those that do not meet the requirements.
A tax deduction reduces taxable income; it is not a direct cash payment. If a taxpayer has little or no tax liability, the deduction generally will not generate an additional refund. As a result, the lowest-income households will not necessarily receive the largest benefit from these provisions. Some may be unable to use the full deduction because their tax liability is already low.
Higher SALT cap favors higher-income filers
The law also sharply increases the cap on the SALT deduction. For taxpayers who itemize, the 2025 cap rises to $40,000 from $10,000 in 2024. The Treasury has not yet released complete filing data for SALT claims, although some data from high-tax states including California and New Jersey show larger refunds.
Heather Long, chief economist at Navy Federal Credit Union, said the change could give some taxpayers in high-tax states more room to claim deductions. Watson said the higher SALT cap is more valuable to middle- and upper-income households, and especially to high-income households, while the benefit begins to phase out once income reaches $500,000.
Itemized deductions are also more common among taxpayers with higher incomes and larger deductible expenses. That makes the SALT provision relatively less useful to lower-income households.
Larger refunds do not measure the law's full effect
The average refund during the 2026 filing season has become another gauge of the policy's effect. Internal Revenue Service data show that the average individual refund stood at $3,276 as of May 8, up 11.5% from around the same point a year earlier.
A refund, however, is not the same as the total tax reduction for the year. It reflects the difference between a taxpayer's final liability for the previous year and the amount already withheld from paychecks. Changes in withholding rates, income, household membership and other tax adjustments can all push refunds higher or lower. An increase in the average refund therefore cannot establish that all households received the same benefit from Trump's new tax provisions.
White House spokesman Kush Desai said tens of millions of Americans had already used at least one of the law's major tax breaks, and that the Trump administration would continue emphasizing the legislation to voters. Tax policy experts said it would be difficult to determine from refund data alone how the tax changes might affect voting decisions in the midterms.
A July poll of about 2,100 U.S. adults found that nearly half of respondents said they could not explain the specific contents of the One Big Beautiful Bill Act. For taxpayers, the eventual reduction still depends on income, eligibility and filing method—not on the name of the legislation.