Economists see the tax cuts in Trump's One Big Beautiful Bill as a principal driver of the U.S. economy in 2026, ⁠both for individuals and businesses. Here's some detail about what's in store.

INDIVIDUAL TAX CUTS

A range of changes in individual tax rates and breaks could boost household war chests in early 2026 through a combination of larger refunds during the filing season and larger take-home income as paycheck withholding levels are reset to account for the changes.

* The law makes permanent the lower individual and business income tax rates in Trump's ‍2017 Tax Cuts and Jobs Act that were due to expire at the end of the year. It ‍also extends the standard deduction in that law and extends and expands the alternative minimum tax exemption and raises the estate tax exemption from $14 million to $15 million.

* Exempts taxes on up to $25,000 ⁠in tipped income until 2029. This tax break phases out for people who earn more than $150,000 and does not apply to all tips — for example, automatic service charges applied to large groups at restaurants are excluded, as are tips received for "pornographic activity."

* ​Exempts taxes on up to $12,500 in overtime pay until 2029. Like the tipped income break, this phases out for people who earn more than $150,000.

* Creates a new deduction of up to $6,000 for people age 65 and older until 2029

* Creates a tax break for up to $10,000 in interest payments on auto loans until ‍2029. This only applies to personal vehicles assembled in the United States.

* Expands the deduction for state and local tax (SALT) payments from $10,000 to $40,000 ⁠until 2029. This tends to benefit affluent homeowners in high-tax states like New York and New Jersey.

BUSINESS TAX BREAKS

The business tax changes are substantially geared toward providing incentives for businesses to invest in their enterprises, both through the extension of lower tax rates and bigger write-offs for capital expenditures and research and development spending.

* Makes permanent the lower corporate tax rates from the 2017 law, which were due to expire.

* Allows ⁠full expensing for certain equipment purchases, which would enable businesses to ​immediately deduct the full cost from their taxable ⁠revenue. This tax break had started to phase out in 2023 and was due to fully expire in 2027.

* Allows full expensing of U.S.-based R&D costs. ‍Small businesses also would be allowed to retroactively deduct the R&D expenses they have incurred since 2022. Independent tax experts say the R&D and equipment breaks are among the most ‌effective types of tax cuts to boost economic growth.

* Loosens limits on interest deductions. The 2017 tax law allowed deduction of net interest costs up to 30% of earnings before interest, taxes, depreciation and amortization (EBITDA), but this was tightened to only apply to EBIT starting in ⁠2022. That break is ​now broadened to include amortization costs ‍as well.

* Extends and increases a tax break for owners of "pass-through" businesses. This would allow a broad category of businesses that includes freelancers, family-owned restaurants, law firms, medical practices, hedge funds and private-equity firms to deduct up ‍to 20% of their income, lowering their effective tax rate.

Independent experts are divided on the effectiveness of this tax cut, with the nonpartisan Tax Policy Center saying there is little evidence that it boosts economic growth.

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