The Tax Foundation previously estimated that Trump’s tax cuts would reduce individual taxes by $129 billion, and up to $100 billion could go toward refunds, increasing an average return of up to $1,000 compared to last year.

A new report from the Tax Foundation, a nonpartisan think tank, found that the average tariff burden for US households will be $1,000 in 2025 and is expected to grow to $1,300 this year, effectively canceling any benefit from the tax cut and underpaying it.

Tariffs will raise a net $1.9 trillion between 2025 and 2034, the Tax Foundation estimatesbut the cuts would reduce revenue by $4.1 trillion.

“Tariffs really limit the potential of the new tax law, to provide relief to taxpayers and to grow the economy,” said Erica York, vice president of federal tax policy at the Tax Foundation. luck. “The negative impact on investment and employment from the tariffs will offset some of the provisions of the new tax law designed to boost the economy.”

Americans are already feeling the impact of the tariffs, which have 96% of the burden fell to importers and US consumers as prices rose, according to the Kiel Institute for the World Economy, a German think tank.

York said importers are eating some of the costs, but the burden of the tariffs is still being felt through less hiring and lower wage increases.

“Americans are still paying the burden, they’re just paying for it through lower income growth instead of higher prices,” York said. He explained that businesses are likely to change their choice to absorb or pass on tariff costs in the future, but the overall long-term effect will be lower after-tax profits.

Big tax cuts feel unfair

The Trump administration called the One Big, Beautiful Bill Act that “the largest tax cut in American history,” but the effects are more felt Narrow than promised, said York.

“The new tax cuts will give you relief if you earn a certain amount, like tips or overtime, or if you’re elderly, but if you have regular W-2 income, your tax cut won’t be as big,” he said.

OBBBA raises the cap for state and local tax deductions from $10,000 to $40,000, which will be felt by most of the middle class, but few in the bottom 20% of households will benefit because many do not pay income taxes, the Wall Street Journal reported.

The bill also provides a $6,000 tax break to seniors, and allows deductions for auto loan interest, tip income and overtime pay. Economists agree that tax cuts favor higher incomes. A recent study by the Cato Institute found those in the top-earning bracket earn more than those with the lowest income. The bottom 10% of households are expected to see an average reduction of 7% in income, according to The Budget Lab at Yale University, while those above will see a 1.5% increase.

Americans are already feeling fatigued by an uncertain economy, York said, and changes to tax cuts and tariffs have the potential to CAN the growing K-shaped economy.

The Supreme Court’s tariff revision will not help

The Supreme Court has repeatedly postponed its decision on whether Trump’s use of emergency powers under the International Emergency Economic Powers Act is constitutional, but analysts expected the Court to rule against the administration.

One potential decision is for the Court to order the Trump Administration to return all collected revenue. About three-quarters of the tariff’s costs will go back to importers, though they pass those costs on to consumers, York said.

On Wednesday, in a mostly symbolic vote, the House moved to strike tariffs against Canada and end the national emergency that Trump declared to impose the tariffs. It will never become law, however, because Trump would have to sign it to undo his own policy.

The Trump administration has promised to begin implementing the new tariffs “in the next day” if the Supreme Court rules against the use of emergency powers.

York explained that the administration’s options for imposing tariffs are more limited. However, if an import is deemed a threat to national security or an investigation finds that a country’s trade practices harm US businesses, the administration can impose more tariffs. Don’t expect long-term changes, he advises.

“If tariffs are out of the picture, it will be a real relief for American workers and businesses,” he said. “But long-term relief is not really on the table right now. It’s a short-term recovery, and then it’s going to be a pivot to more tariffs the other way.”