A “big, beautiful” law with big promises
Earlier this summer, President Trump signed what he proudly called a “big, beautiful bill”—a sweeping tax package that could mean thousands of dollars in savings for millions of Americans. According to a fresh analysis by the nonpartisan Tax Foundation, the typical filer may see an average tax cut of $3,752 in 2026. But here’s the catch: not every state will benefit equally.
Some Americans will see their savings soar, while others may only get a modest boost. Geography, income, and even lifestyle choices like working overtime or earning tips will play a role in how much money taxpayers can keep in their wallets.
Wyoming wins big
So, which state takes the crown for the biggest savings? That honor goes to Wyoming, where residents could enjoy an average reduction of $5,374. Washington state isn’t far behind, also ranking among the top beneficiaries.
Why the big gap? Analysts say it has a lot to do with income levels. Higher earners typically see larger dollar savings under tax cuts, and states with higher-than-average incomes — or a concentration of business owners — are the biggest winners.
As Garrett Watson, director of policy analysis at the Tax Foundation, explained:
“Places with higher incomes are going to have higher nominal tax cuts. The largest tax benefits are going to the mountain states — it’s due to a subgroup of higher-income business owners.”
Smaller cuts for Mississippi and West Virginia
At the other end of the spectrum, residents of Mississippi and West Virginia may see much smaller average tax breaks—around $2,400. Median household incomes in these states trail the national average, with Mississippi at $55,000 and West Virginia at $60,000. For comparison, the national household median income is closer to $80,600.
In short, states with lower incomes don’t benefit as much from provisions that scale with earnings, though some targeted deductions may still bring relief.
When will you see the savings?
While the law technically takes effect in 2025, taxpayers may not feel the full impact until 2026. That’s because the IRS needs time to update withholding tables and implement the new provisions.
This means refunds could look much bigger in early 2026, when people file their taxes for the 2025 calendar year. Seniors in particular may see a lift thanks to a new $6,000 deduction for taxpayers over 65. The higher standard deduction will also help families and individuals across the board.
Bigger refunds — but only if you prepare
Mark Steber, chief tax officer at Jackson Hewitt, says now is the time to get organized. New breaks on tips, overtime pay, and even certain car loans could provide unexpected benefits. But that only works if workers keep good records and update their W-4 forms to avoid surprises come tax season.
“Having this much time left in the year allows taxpayers to make any necessary adjustments,” Steber said. “That can increase a refund or lower the amount due.”
Not everyone benefits equally
One key point: while many Americans will enjoy noticeable relief, the biggest tax cuts are tilted toward the wealthy. The top 1% of earners, making over $1.1 million a year, will see an average annual tax cut of $75,410. By contrast, the bottom 20% of earners may only save about $150. Middle-income households will fall somewhere in between, with savings of about $1,780.
Still, even smaller refunds can feel meaningful, especially as the cost of living continues to rise. For long-time taxpayers like Viviano Ruano of Florida—who has watched her household expenses steadily climb—any chance at relief is welcome news.
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The bottom line
This new tax bill has the potential to put more money back into people’s pockets, but the impact will vary widely depending on where you live, how much you earn, and how you work. Whether it’s a few hundred dollars or several thousand, experts say the best strategy is to plan ahead now so you can maximize your benefit when the law takes full effect.
After all, when it comes to taxes, a little preparation could mean a much bigger payday down the road.
