As the U.S. midterm elections draw closer, Republicans are making President Donald Trump’s “One Big Beautiful Bill Act” a central campaign message. The measure, also framed as “Working Families Tax Cuts,” permanently extends the 2017 tax changes and adds new breaks for tip income, overtime pay, seniors and auto loan interest, while also raising the federal deduction cap for state and local taxes, known as SALT.
Policy experts say, however, that the benefits were not evenly distributed across households. Treasury Secretary Scott Bessent told the House Committee on Financial Services this week that the law delivered tax relief “directly to millions of low- and middle-income Americans.” He said more than 64 million tax returns claimed at least one of Trump’s “signature new tax cuts,” including deductions for tips, overtime, auto loan interest or the enhanced senior deduction.
At the same time, Joseph Rosenberg, a senior fellow at the Urban-Brookings Tax Policy Center, told CNBC that the provisions affected households differently and that the outcome depended on each family’s specific circumstances. White House spokesman Kush Desai said tens of millions of Americans had used at least one of the provisions and that Donald Trump would continue to promote the law as a historic achievement.
Permanent extension of the 2017 tax cuts
Experts say the biggest impact came from making the 2017 Tax Cuts and Jobs Act provisions permanent. Those changes included lower tax brackets, larger standard deductions, a more generous child tax credit, and a higher estate and gift tax exemption, among other provisions.
According to the Tax Foundation, about 62% of Americans would have faced tax increases in 2026 if those provisions had been allowed to expire. Garrett Watson, the Tax Foundation’s vice president of federal tax policy, said a “clear majority” of the overall benefit came from locking in the earlier tax cuts rather than from the new deductions. But because the move largely preserves the existing tax framework, many taxpayers may not feel a dramatic change in practice.
New deductions favored more specific groups
The new deductions, first floated during the 2024 presidential campaign, phase out after certain income thresholds. Watson said they are aimed at specific categories of taxpayers and, for some filers, may have made a meaningful difference in year-over-year tax liability.
Latest Treasury data show that the average tips deduction exceeded $7,000, while the average senior deduction was more than $7,500. Still, deductions only reduce taxable income and do not generate a refund if no tax is owed. That means the lowest earners are less likely to benefit substantially, since many of them may have little or no income tax liability to begin with.
The legislation also sharply increased the SALT deduction cap for taxpayers who itemize. For 2025, the limit rose to $40,000 from $10,000 in 2024. Treasury has not yet published full SALT claim data, but some indicators point to higher refunds in high-tax states such as California and New Jersey. According to Heather Long, chief economist at Navy Federal Credit Union, that could suggest those filers benefited from the expanded SALT deduction. Watson added that the larger SALT break is most valuable for upper-middle-income to upper-income earners because it begins to phase out at $500,000.
What tax refunds show
Average tax refunds were closely watched as one possible gauge of how Americans fared under the 2025 tax changes. According to the latest IRS figures, as of May 8 the average refund for individual returns in the 2026 filing season was $3,276, up 11.5% from roughly the same point a year earlier.
Even so, experts caution that refunds and balances due do not always directly reflect the effect of tax law changes. Those figures also depend on paycheck withholding, income changes, shifts in tax status and other factors.
The political effect is less clear. With the midterms approaching, some analysts say it is still difficult to predict whether Trump’s tax breaks will influence voters. A July Politico poll found that nearly half of Americans could not explain what Trump’s One Big Beautiful Bill Act actually is.
