On the same day that we celebrate our nation’s 250th anniversary, the most recent tax cuts will turn a year old.
President Trump signed into law the One Big, Beautiful Bill Act, known as the Working Families Tax Cuts, on Independence Day 2025. In the past year, Americans have come to realize that, for their households, big actually is beautiful.
These tax cuts reduce the penalty on hard work. A nurse or police officer putting in extra time after hours and on holidays, away from their families, can now keep more of their overtime pay. This year, 25 million taxpayers took the new deduction on overtime pay, saving $90 billion. That translates into an average of $3,100 of earnings that they can save for a down payment or fund a family vacation.
The tipping culture is deeply ingrained in America. Congress has done well to reduce the penalty for providing good service to diners and clients. Millions of Americans work service-based jobs, earning good livings or supplemental cash. These opportunities allow men and women the freedom to travel or the flexibility to take care of family responsibilities.
This year, 6 million taxpayers claimed the new deduction on tipped income, allowing them to save, on average, $7,100 of their tips from taxes.
No tax on tips is a pro-woman policy, as women are big beneficiaries. Based on data from the Bureau of Labor Statistics, women dominate the personal care industry (85 percent of manicurists and pedicurists, 92 percent of hairdressers and cosmetologists, and 100 percent of skin care specialists) and occupy the majority of restaurant and service industry jobs (57 percent of bartenders, 56 percent of food preparation workers, 70 percent of wait staff, and 84 percent of hosts).
By far the most popular of the new tax benefits was the new deduction on income earned by those aged 65 and older. Some 30 million seniors took this deduction this year, for a savings of $7,500 on average.
Raising children can be a costly endeavor, and saving for their post-secondary education or future endeavors is difficult for many parents. However, the Working Families Tax Cuts created a new, temporary family benefit that will reap dividends in the decades to come.
Trump Accounts give children born between 2025 and 2028 a head start on education, home buying, or retirement savings. Some 5 million babies had Trump Accounts opened in their names. About a quarter (1.2 million) of them are eligible for the $1,000 seed grant. By contributing just $250 annually to the initial $1,000 in a kid’s account, an 18-year-old could have $19,000 to start adulthood.
The Working Families Tax Cuts did more than create new incentives; they prevented scheduled rate increases and made lower rates permanent.
The Standard Deduction, taken by nine out of 10 Americans, has been increased even more to simplify taxes and save time and money. The Child Tax Credit, which helped over 34 million American families, will keep Americans from falling into poverty. Importantly, these tax savings are locked in by federal law and won’t expire.
Let’s face it: if conservatives in Congress and President Trump had not acted, Americans would have faced a 22 percent tax increase. Instead, the U.S. House Ways and Means Committee estimates that real annual after-tax take-home pay will rise by up to $10,000 for a median family with two kids, and real wages by $4,000 to $7,200 per worker.
The philosophy that government knows best motivates policymakers to constantly raise taxes on individuals and businesses so that government can redistribute those earnings where they see fit. Frustratingly, these policymakers lack accountability or willingness to combat widespread corruption and fraud plaguing our federal social safety net programs.
The Working Families Tax Cuts flips that model on its head. As Americans, we know what’s best for our families, and we would rather keep more of our earnings to spend on what matters to us. We especially don’t want to send Washington an extra penny until they get fraud under control.
The tax cuts are working for households up and down the income ladder, providing for timely needs. Larger tax refunds this year provided a cushion against temporarily high gas prices. Ongoing savings mean more discretionary income for vacations and back-to-school shopping, more funds for down payments on a new home, and new seed funding for our children’s futures.
This is what working Americans want. Congress and the president deserve credit for delivering.
Patrice Onwuka is vice president for economic policy and director of the Independent Women’s Center for Economic Opportunity.
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