It is 2026, and the dust has finally settled on the massive tax overhaul that reshaped the American economy. Most people remember it as the Tax Cuts and Jobs Act (TCJA) of 2017, but the conversation has shifted recently thanks to the One Big Beautiful Bill Act (OBBBA) passed in 2025, which made many of those "temporary" cuts permanent.
So, who is actually coming out on top?
If you ask ten different people, you’ll get ten different answers. Some say it was a gift to the wealthy; others swear it saved the middle class. Honestly, the truth is way more nuanced than a catchy campaign slogan. It’s a mix of corporate windfalls, modest wins for families, and some pretty sharp stings for people in high-tax states.
The Big Corporate Win
Let’s start with the elephant in the room: the corporate tax rate. Before the 2017 changes, the top rate for corporations was a whopping 35%. The TCJA slashed that down to 21%.
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That is a massive drop.
Basically, this change was designed to make the U.S. more competitive. Proponents argued that if companies had more cash, they’d build more factories and hire more people. Research from groups like the Tax Foundation suggests there was a bump in investment, particularly in intellectual property and equipment.
But here is where it gets tricky. While investment went up, a huge chunk of that extra cash didn’t go into worker paychecks. It went to shareholders. We saw a massive surge in stock buybacks and dividends. If you own a lot of stock, you won’t hear any complaints from me—you definitely benefited.
What about the workers?
According to a 2025 study from UCLA, while employment at large corporations rose by about 1.3%, the "typical" worker didn't see a life-changing raise. Most of the wage growth happened at the 95th percentile. Executive compensation climbed over 2%, while the median worker's earnings stayed relatively flat when adjusted for inflation.
The Middle-Class Reality Check
You’ve probably heard that the middle class got nothing. That’s not quite true. Most families did see their tax bill go down, but the "how" and "how much" varies wildly.
The standard deduction was nearly doubled. For 2026, it’s sitting at $32,200 for married couples and $16,100 for individuals. This was a huge win for people who don't have complicated finances. It simplified everything. You don't have to track every single receipt for charitable donations or medical bills because the standard amount is already so high.
- The Child Tax Credit: This was bumped up to $2,000 in 2017 and recently nudged to **$2,200** under the new 2025 legislation. For a family with three kids, that’s a direct $6,600 off their tax bill.
- Lower Brackets: Most of the individual tax rates were lowered by about 2-3%. The 15% bracket became 12%, and the 25% bracket became 22%.
However, there was a trade-off. To pay for these lower rates, the law got rid of personal exemptions. For a large family, losing those exemptions sometimes cancelled out the benefit of the higher standard deduction.
The SALT Cap: A Bitter Pill for Some
If you live in a place like New York, New Jersey, or California, you probably have a different opinion on these tax cuts.
The law put a $10,000 cap on the State and Local Tax (SALT) deduction. Before this, you could deduct almost everything you paid in state income and property taxes from your federal return. Now? You’re capped at ten grand.
For a homeowner in a high-tax suburb, this was essentially a tax hike. It’s one of the main reasons why the "benefits" of the tax cuts feel very lopsided depending on which zip code you call home. Interestingly, the 2025 OBBBA legislation actually increased this cap slightly for some, but the core limitation remains a sore spot for the upper-middle class in "blue" states.
Small Business Owners and the "Pass-Through"
There is a specific part of the tax code called Section 199A. It sounds boring, but it’s huge for small business owners.
Most small businesses are "pass-through" entities, meaning the profits are taxed at the owner's individual rate rather than the corporate rate. The tax cuts introduced a 20% deduction for this income.
Basically, if your business makes $100,000, you might only be taxed on $80,000 of it.
The Congressional Budget Office (CBO) found that this was one of the most popular provisions, but again, the benefits are concentrated. About half of the benefits from this specific deduction go to millionaires, simply because they own the most profitable pass-through businesses. Still, for a local shop owner or a freelance consultant, it's a significant chunk of change kept out of the government's hands.
Winners vs. Losers: A Quick Summary
| Group | The Verdict |
|---|---|
| Large Corporations | Huge winners. The 21% rate is permanent and boosted after-tax profits significantly. |
| Wealthy Individuals | Big winners. Lower top marginal rates (37% vs 39.6%) and a massive increase in the Estate Tax exemption (now roughly $15 million for 2026). |
| Middle-Income Families | Modest winners. Most saw a tax cut of $1,000 to $2,000, though the loss of exemptions and the SALT cap limited the upside for some. |
| Low-Income Earners | Mixed. While the standard deduction helps, many don't pay much income tax to begin with. The bigger story for this group in 2026 is actually the cuts to social programs (like SNAP and Medicaid) used to fund the permanent tax breaks. |
| High-Tax State Homeowners | Often losers. The SALT cap remains a significant hurdle for those with high property taxes. |
Why It Matters Now
The reason we're talking about this in 2026 is that the debate has moved from "if" these cuts work to "how" we pay for them.
The National Debt has continued to climb, and recent reports suggest the tax cuts reduced federal revenue by about $1.9 trillion over the first decade. To balance the books, the 2025 OBBBA legislation included some pretty heavy cuts to spending.
We’re seeing stricter work requirements for Medicaid and SNAP. For some, the $1,500 they saved on taxes is being swallowed up by higher healthcare premiums or the loss of other benefits. It’s a classic case of the government giving with one hand and taking with the other.
How to Handle Your Own Taxes This Year
If you're trying to figure out your own strategy, here are a few things to keep in mind for the 2026 filing season:
- Check the Senior Deduction: If you or your spouse are 65 or older, there is a new $6,000 deduction available. It starts phasing out if you make over $75,000 (single) or $150,000 (joint), but for many retirees, this is a major new benefit.
- Look at Overtime: The new law introduced a "no tax on overtime" provision, allowing a deduction of up to $12,500 for overtime pay. If you’re a shift worker or in a trade, this could be your biggest win this year.
- Audit Your SALT: If you’re near that $10,000 limit, talk to a pro. Some states have created workarounds (like payroll taxes instead of income taxes) that might help you get around the cap.
- Re-evaluate Your Business Structure: If you’re still a C-Corp, the 21% rate is great, but the 20% pass-through deduction might still be better depending on your bracket.
The tax code is never "finished." It’s a living document that changes every time a new bill gets signed. While the 2017 cuts started the fire, the 2025 extensions have locked in the current landscape for the foreseeable future.
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Whether you think it's fair or not usually depends on where you sit on the income ladder—and which state you call home.
Actionable Next Steps:
Check your 2025 tax return to see if you hit the SALT cap. If you did, and you're an employee, look into whether your state has implemented a "SALT workaround" through payroll taxes that could lower your federal taxable income for 2026.