Congress has approved a massive Republican-authored legislative package combining trillions in tax cuts amid sweeping spending reductions, and broad policy shifts across national security, social welfare, and energy sectors, in a big win for the President. Nicknamed “One Big Beautiful Bill,” the legislation passed the House narrowly on Thursday, ahead of the 250th celebration of the US and July 4th.

The “Big Beautiful Bill” brings major changes to how Americans will pay taxes starting in 2026. It includes permanent tax cuts for the wealthy, temporary deductions for the middle class, and small breaks for low-income earners, while also cutting federal programs like Medicaid and food stamps. The bill also introduces temporary deductions for seniors, tips for service, and overtime that expire in just a few years.

According to the Tax Policy Center, around 85% of households will see a tax cut by 2026 — but that number could shrink by 2030 as temporary provisions expire.

Below is a break-down under the new bill:

• Households making $217,000 to $318,000 will save about $5,400, a 2.6% rise in after-tax income.
• Those earning between $318,000 and $460,000 will get a bigger cut — around $8,900, or a 3.1% boost.
• If your income falls between $460,000 and $1.1 million, the average cut jumps to $21,000, or 4.4% of after-tax income.
• For the top 1% and top 0.1% (earning more than $1.1 million or $5 million, respectively), they will receive a 3.5% after-tax income increase and 3.2% after-tax income increase.

Notably, about 60% of the total tax benefits in the bill are projected to go to the top 20% of income earners, as per the Tax Policy Center.

How much will middle-class Americans save in taxes?

• Those making $100,000 to $200,000 will get an average $3,000 tax break (2.5% after-tax income boost).
• Households bringing in $75,000 to $100,000 can expect about $1,700 back (2.3%).
• If you earn $50,000 to $75,000, the savings drop to around $1,000.

So while many middle-class families will benefit from the bill, the size of those cuts don’t compare to higher earner’s benefit.

Will low-income Americans really benefit from this tax plan?

Low-income workers — especially those earning less than $50,000 per year — will get the smallest tax breaks, and they may face larger cuts elsewhere.

• Households earning $40,000 to $50,000 will see tax savings of around $630 (1.5–1.9%).
• Those making under $34,600 will get a modest $150 cut, about 0.8% of their after-tax income.

Here’s the tradeoff: the bill slashes federal Medicaid spending by $1 trillion, which could leave 12 million people without health insurance by 2034, according to the Congressional Budget Office. It also tightens eligibility for SNAP (food stamps) and Medicaid, which could lead to millions losing benefits — a move that hits low-income households the hardest.

What new tax deductions are included in the bill?

• The child tax credit rises permanently to $2,200.
• The standard deduction increases by $750.
• A new $6,000 deduction for Americans over 65 applies through 2028.
• A $25,000 tax exemption on tips is introduced, but it only lasts for three years.
• An additional $12,500 deduction for overtime will also expire after three years.

Another major win for taxpayers in high-tax states: the SALT (State and Local Tax) deduction cap goes up from $10,000 to $40,000, easing the burden for many in states like California, New York, and New Jersey.

How much will the tax cuts increase the national debt?

These tax changes come at a high price. Depending on which estimates you follow, the bill adds between $3.4 trillion and $6 trillion to the national debt over the next decade. 

• The Congressional Budget Office estimates the bill will add $3.4 trillion to the debt over the next decade.
• The Committee for a Responsible Federal Budget puts the number at $4.1 trillion.
• The Cato Institute, a conservative think tank, estimates the cost could be as high as $6 trillion.

This has drawn criticism from some Republicans who’ve previously branded themselves as fiscal conservatives. Despite their concerns about the rising national debt, many still voted for the bill, seeing it as a core part of the President’s 2024 campaign promise to “cut taxes.”

So, what happens next?

Now that the bill is signed, most changes will start in 2026, although some provisions will kick in immediately with the wealthiest receiving the most benefit — and permanently. Middle and low-income households will need to watch how the tax cuts impact their long-term expenses and savings. We would encourage working families and seniors to consider a financial plan that analyzes the impact of tax cuts and their expiration. As always, consult with your advisor.