When Uncle Sam comes knocking on your door this April, you may owe him less than you think. If you’re lucky, it might even offer a refund, bigger than you bargained for.

That’s because taxpayers are filing returns this year after the One Big Beautiful Bill, which fulfills several of President Trump’s 2024 campaign promises, including eliminating tip taxes and Social Security, though Congress cut them back a bit before sending the legislation to the Oval Office for his signature. Does a Trump green light for sweeping legislation that significantly alters the tax code sound familiar? If you paid attention in 2017, it sure will.

Early in his first term as president, Trump signed the Tax Cuts and Jobs Act (TCJA), which made major changes to Americans’ income taxes. Many of the temporary provisions included in that law would have ended after 2025, however, had lawmakers not stepped in through the OBBBA.

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The Big Beautiful Bill cut individual income taxes by about $129 billion by 2025, which can generate a pretty penny for individual taxpayers, especially this year, according to the Tax Foundation.

“Because the IRS did not adjust the withholding tables after the law was passed, workers generally continued to withhold more tax from their paychecks than the new law required,” Tax Foundation experts wrote in a recent publication. analysis of the invoice “As a result, instead of gradually receiving the benefit of the tax cuts through higher take-home pay over the year, most taxpayers will receive it all at once when they file their returns.”

The foundation estimates that the average tax cut from major provisions occurring in 2025 will be $611, with middle- and upper-middle-income taxpayers making up the largest share of beneficiaries. (Higher-income filers are mostly ineligible, and lower-income taxpayers with little or no tax liability won’t see much change either.) In other words, the estimated average tax refund in April will be $3,800 compared to $3,052 for fiscal year 2024 and $3,004 for fiscal year 2023.

The House bill, named after Trump’s plan to enact a range of policy initiatives, from increased defense spending to concurrent benefit cuts, makes the tax brackets and rates established in the TCJA (10%, 12%, 22%, 24%, 32%, 35% and 37%) permanent, at least for now. This may not look like like a big deal since you’ve probably gotten used to the benefits of these lower tax rates. But if the new law didn’t recall current rates, nearly all taxpayers likely would have owed more this year.

“This was a huge uncertainty, unknown and risk for taxpayers last year,” William McBride, chief economist at the Tax Foundation, told The Daily Upside.

Starting in 2026 (effective for taxes you’ll file in 2027), there’s also an inflation adjustment for the two lowest brackets. “In practical terms, this means that all taxpayers will see slightly lower taxes, regardless of their income level,” Hayden Adams, director of tax planning and wealth management research at Charles Schwab. he wrote recently

As you know, the TCJA increased the standard deduction, which is a fixed amount of money the IRS allows you to subtract from your taxable income, reducing what you owe. Taxpayers can choose to itemize their deductions, which can make sense if the amounts (including mortgage interest payments, property taxes, charitable donations and more) add up to a larger total than the standard deduction, but nearly 90% of taxpayers take the simpler option.

The OBBBA, later known as the Working Families Tax Cuts Act to increase its appeal to voters, increased the standard deduction even more than the TCJA, to $15,750 for singles and $31,500 for married couples filing jointly.

The state and local tax (SALT) deduction allows itemizing taxpayers to deduct some of the taxes they’ve paid to state and local governments: think sales, real estate, and payroll taxes. The OBBBA increased the limit on these deductions for taxpayers earning less than $500,000 to $40,000, increasing by 1% annually until 2029, when it is expected to return to $10,000. For people who earn more than $500,000, the deduction is gradually reduced.

Before the 2017 tax bill, there was no cap on SALT deductions, and the cap frustrated residents of large metropolitan areas like New York, who found themselves paying significantly more because of the change. Some high earners moved to save money.

“When people file their taxes now through April, the people who were affected by the SALT limits, people in the big cities, will see significant tax relief for the 2025 tax year,” says McBride. “This will be a big boost in refunds and should provide consumers with a lot of extra money that many of them are not expecting.”

Scott Schwartz, managing partner at OnePoint BFG Wealth Partners, says that’s the change he sees moving the needle the most.

“For your middle-class and upper-middle-class person who is making very good money, those people will probably benefit this year from itemized deductions,” says Schwartz.

Other sections of the bill enact versions of the popular tax cuts Trump touted while running for a second term in the White House.

For example, the president called for the elimination of the income tax on Social Security benefits. While the Big Beautiful Bill doesn’t go that far, it does give taxpayers over 65 an additional $6,000 deduction through tax year 2028. The deduction begins to phase out when filers earn more than $75,000 (or $150,000 for married couples filing jointly).

The president also promised an end to tip taxes. For tax years 2025 through 2028, there is a deduction of up to $25,000 in tip income that gradually decreases for individuals earning more than $150,000 ($300,000 for married couples filing jointly). The OBBBA also introduced a deduction of up to $12,500 for overtime earnings, with the same phase-out limits.

Meanwhile, the child tax credit, a tax break for families with qualifying children, got a $200 increase to $2,200. And there’s a new $10,000 deduction for car loan interest that’s starting to phase out for taxpayers with incomes above $100,000 ($200,000 for married couples filing jointly).

Because of the variety of changes, generalizing the law’s overall effects on taxpayers is complicated.

“It’s going to be different for you than it is for me,” says Schwartz. “It’s going to be different for everyone depending on what your individual circumstances are.”

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