Americans are on track for a major financial boost in 2026 as President Donald Trump’s sweeping tax overhaul begins to hit household wallets fully.
Treasury Secretary Scott Bessent summed it up bluntly.
“2025 is setting the table. The feast and the banquet will be in 2026,” he said, arguing that Trump’s tax reforms are about to deliver real money back to workers.
The changes stem from Trump’s One Big Beautiful Bill Act, signed on July 4, which locked in lower tax rates, expanded deductions, and eliminated several taxes that had squeezed working Americans.
While many provisions technically apply to the 2025 tax year, most workers did not adjust their paycheck withholdings. That means refunds are coming.
According to the nonpartisan Tax Foundation, average after-tax income is expected to rise by 5.4%. Upper-middle-income workers could see gains exceeding 6 percent, while even lower-income earners are projected to receive increases near 3%.
One of the biggest changes is the expansion of the state and local tax deduction cap. The SALT cap jumps from $10,000 to $40,000, a shift that could save middle-class families in high-tax states thousands of dollars.
The standard deduction also rises again. Single filers can now deduct $15,750, while married couples can deduct $31,500. Taxpayers can choose whichever option saves them more.
Trump’s promise to eliminate taxes on tips is also becoming a reality. Workers who earn gratuities can now deduct up to $25,000 per year, with phaseouts beginning at $150,000 in income. Waiters, bartenders, entertainers, and service workers stand to benefit immediately.
Overtime pay is getting similar treatment.
The premium portion of overtime wages is now deductible. A worker earning $30,000 in overtime could deduct $10,000, potentially saving thousands on their tax bill, according to the New York Post.
Seniors also score big under the new law.
Instead of directly eliminating taxes on Social Security, Republicans added a new deduction. Americans over 65 can now deduct up to $6,000 per person, wiping out income tax liability for many retirees.
Trump also delivered on a lesser-known promise by allowing deductions for interest on auto loans, but only for vehicles assembled in the U.S.
The deduction is capped at $10,000 per year and is designed to boost domestic manufacturing.
Charitable giving also received a quiet upgrade. Even taxpayers who take the standard deduction can now write off up to $1,000 per filer in donations.
The law also created new “Trump accounts” for children, seeding retirement-style investment funds with $1,000 for kids born between 2025 and 2028.
Democrats opposed the bill unanimously, but Trump allies argue the results will speak for themselves once refunds start hitting bank accounts.
As Bessent put it, the table is set. For millions of Americans, 2026 is when the feast arrives.
