Most U.S. taxpayers will pay less in taxes starting in 2026, with average savings estimated at $2,900 under the One Big Beautiful Budget Act (OBBBA) signed by President Donald Trump on July 4.
According to the Tax Policy Center (TPC), a nonprofit tax research institute, the tax cuts stem from provisions in the new law that extend the expiring provisions of the 2017 tax reform while introducing additional benefits such as a higher cap on state and local tax (SALT) deductions.
However, the TPC’s analysis shows the benefits are concentrated among high-income earners. About 60% of total tax relief will go to the top 20% of earners, defined as those making more than $217,000 annually.
In contrast, households earning less than $34,600—the bottom 20%—will see only modest relief, saving an average of $150, which equals about 0.8% of their after-tax income. Meanwhile, the top 20% will save an average of $12,540, or 2.5% of their after-tax income.
The disparity is even greater at the top. The highest-earning 0.1%—those making more than $5.18 million a year—are projected to receive over $280,000 in annual tax savings, drawing criticism that the tax cuts disproportionately benefit the wealthy.
Experts note that actual savings will vary depending on individual circumstances, such as the number of qualifying children for child tax credits or whether the taxpayer receives tip income. They emphasize the importance of tailoring tax strategies to individual financial situations in order to maximize benefits.
BY WONHEE CHO [cho.wonhee@koreadaily.com]
