You’ve heard the noise. Every few years, the same headlines pop up about the "Trump tax cuts" and whether they're helping the average person or just the guys with the yachts. Honestly, it’s a lot of math to wade through. But here’s the kicker: we aren’t just talking about 2017 anymore. Because it's now 2026, the tax landscape has shifted again with the "One, Big, Beautiful Bill" (OBBBA) passing just last year.
Basically, the 2017 Tax Cuts and Jobs Act (TCJA) was supposed to expire. If you had looked at your calendar a couple of years ago, you would've seen a massive "tax cliff" looming for the end of 2025. Rates were scheduled to jump back to their old, higher levels. But that didn't happen. Instead, the new legislation made most of those trump tax cuts by bracket permanent.
It’s a different world for your wallet now. Let’s break down what’s actually happening with your money, without the political spin.
The New Reality of Your Tax Bracket
Most people think of tax brackets as a flat percentage of their whole paycheck. It doesn't work like that. You pay a certain rate on the first chunk of money, a higher rate on the next, and so on. It’s a staircase.
Under the old pre-2017 rules, the top rate was 39.6%. The 2017 law dropped that to 37%. For a while, everyone was holding their breath to see if it would snap back. But the permanent extension means that 37% is here to stay for the highest earners.
💡 You might also like: Why The Scott Trust Limited is the Weirdest (and Most Successful) Business Model in Media
What Single Filers are Looking at in 2026
If you’re filing solo, the numbers have moved a bit due to inflation adjustments, but the percentages remain the same.
The 10% rate now covers you for everything up to $12,400. Once you cross that, you hit the 12% bracket, which goes all the way up to $50,400. This is where most middle-class earners live.
If you're doing better than most, the 22% bracket kicks in for income between $50,401 and $105,700. Then comes the 24% bracket up to $201,775. It's a steep climb from there: 32% for income up to $256,225, 35% up to $640,600, and finally that 37% cap for anything over $640,601.
The Joint Filer Perspective
Married couples get a much wider "staircase." It’s kinda like two single brackets stacked side-by-side to avoid the "marriage penalty" that used to plague the tax code.
- 10% Bracket: Up to $24,800
- 12% Bracket: $24,801 to $100,800
- 22% Bracket: $100,801 to $211,400
- 24% Bracket: $211,401 to $403,550
- 32% Bracket: $403,551 to $512,450
- 35% Bracket: $512,451 to $768,700
- 37% Bracket: Over $768,701
Compare that to the 2017 levels where the 25% bracket (now 22%) started at just $75,900 for couples. You’re keeping a significantly larger chunk of those middle-income dollars now.
Standard Deductions and the $40,000 SALT Twist
Rates are only half the story. The other half is what you don't pay taxes on at all.
Before 2017, the standard deduction was tiny—about $6,500 for singles. The Trump cuts nearly doubled it. For 2026, the standard deduction has climbed to $16,100 for individuals and a whopping $32,200 for married couples.
For about 90% of Americans, itemizing (listing out your mortgage interest, charity, etc.) makes zero sense anymore. The standard deduction is just too big to beat.
But wait. There’s a new wrinkle with the State and Local Tax (SALT) deduction.
The 2017 law famously capped SALT at $10,000, which made people in high-tax states like California and New York pretty salty—pun intended. The 2025 legislation actually threw a bone here, raising that cap to $40,000 for most people. However, if you make over $500,000, that cap starts shrinking back down to $10,000. It’s a classic "tax the rich" pivot tucked inside a tax cut bill.
The "No Tax on Tips" and Overtime Rules
This is the stuff that actually makes a difference for service workers and blue-collar trades.
There’s a brand new deduction for 2026. If you work in a tipped profession—think bartenders, servers, or hair stylists—you can now exclude up to $25,000 of your tips from federal income tax.
Similarly, for the first time, there’s a deduction for overtime pay. You can deduct the "extra" half of your time-and-a-half pay up to $12,500 (or $25,000 for couples).
It’s a massive shift. But don't get too excited if you're a high-flyer; these benefits phase out once you hit $150,000 in income ($300,000 for couples). It's very specifically targeted at the working class.
What About the Kids and the Seniors?
The Child Tax Credit (CTC) was a major pillar of the 2017 plan, jumping from $1,000 to $2,000. In 2026, it’s sitting at $2,200 per child, and it's finally indexed for inflation so it won't lose value as milk gets more expensive.
✨ Don't miss: Is Social Security Going Up: What Most People Get Wrong About the 2026 COLA
If you’re over 65, there's a new "Senior Bonus Deduction."
Basically, you get an extra $6,000 off your taxable income just for being a senior. It’s a simple, flat deduction that applies whether you itemize or not. Like the tips and overtime rules, though, it disappears if your income is too high (starting to phase out at $75,000 for singles).
Why the Controversy Still Exists
Despite the "Working Class" branding of the recent 2025 updates, the math still shows that the biggest winners are at the top.
If you make $30,000, a 2% rate cut saves you a few hundred bucks. If you make $3,000,000, that same 2% cut is a down payment on a house. Plus, the Qualified Business Income (QBI) deduction—which allows business owners to deduct 20% of their earnings—was made permanent.
Critics like the Institute on Taxation and Economic Policy (ITEP) point out that while everyone gets a cut, the dollar amounts for the top 1% are massive compared to the average family.
On the flip side, proponents argue that the higher standard deduction and the new SALT cap relief are the real "middle-class" wins that keep the economy moving.
Actionable Next Steps
- Check Your Withholding: With the new "No Tax on Tips" and Overtime deductions active for 2026, you might be overpaying your estimated taxes. Talk to your employer about adjusting your W-4 if you're a high-overtime or tipped worker.
- Evaluate Your 401(k) Contributions: Since the lower tax rates (like the 12% and 22% brackets) are now permanent, the "Roth vs. Traditional" debate has changed. If you think rates will eventually go back up in the 2030s, locking in these lower rates now with a Roth 401(k) or IRA might be the smarter play.
- Senior Planning: If you or a spouse are 65 or older, make sure your tax software or CPA is aware of the new $6,000 Senior Bonus Deduction. It’s separate from the standard deduction and can be easily missed.
- Business Owners: The 20% QBI deduction is no longer "temporary." This makes "pass-through" entities like S-Corps and LLCs much more attractive long-term compared to C-Corps. Review your business structure with a professional to ensure you're maximizing this permanent break.