The states with the biggest tax cuts in 2026
Find out which states will receive the biggest tax cuts in 2026, thanks to Trump new Big, Beautiful Bill law
States that will benefit the most are those with higher incomes and high state and local taxes.
For example, Wyoming residents will receive the largest average tax cut, estimated at $5,374, thanks to the law's bias toward high-income taxpayers, according to Garrett Watson, director of policy analysis at the Tax Foundation.
Furthermore, the higher allowable deduction for state and local taxes especially benefits states like New Jersey and New York, where property taxes are high.
By contrast, taxpayers in lower-income states like Mississippi and West Virginia will see the smallest tax cuts. The median household income in Mississippi is about $55,000, while in West Virginia it is $60,000, compared with the national average of $80,600, according to the St. Louis Federal Reserve. This means that tax cuts won't be the same for everyone and will depend largely on income level.
The cuts will also be determined by each taxpayer's financial situation. For example, workers who receive tips or overtime pay could see larger reductions thanks to new provisions that eliminate taxes on this income.
"Having so much time left in the year allows taxpayers to make the necessary adjustments to increase a refund or reduce what they owe, and it can be as simple as adjusting withholding on a W-4," advised Mark Steber, tax director at Jackson Hewitt.
In terms of income allocation,The data shows that the cuts primarily benefit those with the highest incomes. The richest 1% of Americans, with incomes over $1.1 million, will receive an annual tax benefit of $75,410, while households in the lowest 20%, with incomes under $36,000, will receive only $150 on average. Middle-income families, between $66,801 and $119,200, could see a reduction of $1,780.
Although many of the law's benefits take effect in 2025, the Internal Revenue Service (IRS) is still fine-tuning some details, so the full changes to tax withholding will be reflected in 2026. This means that the first refunds next year could be larger, especially for seniors who qualify for the new $6,000 deduction for those 65 and older, in addition to the overall increase in the standard deduction.
It's important to keep in mind that these are estimates made by Tax Foundation experts. The reality of each taxpayer will not be reflected until next year.