We know taxes can feel complex. We aim to make them easy for you. The One Big Beautiful Bill Act, signed on July 4, 2025, locks in lower individual income tax rates from the 2017 Tax Cuts and Jobs Act. This prevents higher rates from returning in 2026. You keep seven brackets from 10% to 37%, adjusted for inflation each year. Before this law, rates would rise to 10% to 39.6%. Studies from groups like the Tax Foundation and Tax Policy Center show this saves most households $1,500 to $3,000 each year. It lifts GDP by 0.5% to 1.1% over time. Yet, it adds $2.5 trillion to $3 trillion to the federal deficit in 10 years. Lower-income homes gain more as a share of income. Higher earners see bigger dollar savings. Benefits include stronger work rewards and growth. Drawbacks cover wider income gaps and budget pressure. Real examples show tax cuts of 5% to 15%.
The Story Behind the Change
Congress passed this law after Republicans gained full control post-election. It fulfills promises to avoid tax hikes. The 2017 act cut rates temporarily through 2025. Top rate dropped from 39.6% to 37%. Brackets widened to help middle and high earners. Without action, old rates would hit 62% of filers harder, per Tax Foundation data. This permanency fights inflation’s bracket push. It starts for 2026 taxes. Early adjustments help low brackets.
Breaking It Down
This law sets the 2017 rates forever. Old system had brackets at 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%. New ones stay at 10%, 12%, 22%, 24%, 32%, 35%, and 37%. Brackets adjust yearly with chained CPI-U for inflation. See this table for 2026 single filer brackets, based on CBO and IRS estimates. Joint filers double these roughly.
Income Range (Single Filer) | Old Rate (If No Law) | New Rate (With Law)
$0 – $12,000 | 10% | 10%
$12,001 – $58,000 | 15% | 12%
$58,001 – $100,000 | 25% | 22%
$100,001 – $204,000 | 28% | 24%
$204,001 – $245,000 | 33% | 32%
$245,001 – $620,000 | 35% | 35%
Over $620,000 | 39.6% | 37%
This avoids 3% to 5% jumps in middle ranges. Most people land there. CBO models cut average rates by 1.5% to 2.5%. Tax Foundation sees 1.1% GDP rise from better work and investment drives. Deficit grows $2.6 trillion to $3 trillion in 10 years, per Joint Committee on Taxation. This might strain programs.
Real-Life Savings
We care about you and your business. See how this helps different homes in 2026. We use simple math with standard deductions. No extra credits or items. Old way: $8,350 single deduction, $16,700 joint, plus $5,300 per person exemption. New way: $16,000 single, $32,000 joint, no exemptions.
Low-Income Single ($40,000 income):
Old tax: $3,353. New tax: $2,640. You save $713, or 21%. No more 15% bracket.
Middle-Income Family ($120,000 income, married with two kids):
Old tax: $13,525. New tax: $10,086. You save $3,439, or 25%. Big help for family costs.
Upper-Middle Single ($200,000 income):
Old tax: $42,778. New tax: $37,195. You save $5,584, or 13%. Skips 28% bracket start.
High-Income Couple ($600,000 income, no kids):
Old tax: about $190,000. New tax: about $170,000. You save over $20,000, or 10% to 15%. Fuels growth.
Average cut hits $2,000, per our estimates. Your success is our goal.
What It Means for You
You’re in good hands with our team. Plan ahead with steady rates. Real estate owners forecast lower rental taxes. Crypto users keep 0% to 20% gains rates. High-cost state families gain from wide brackets.
Steps to Take Now
Update your W-4 form in 2025 for right withholding.
Run 2026 models with your trusted tax professional to shift income smartly.
Convert to Roth now, since low rates cut the cost.
Use QBI deduction for business, now permanent.
Book a review with us by end of 2025 to map your savings.
Final Thoughts
IRS rules might delay a bit. Watch for higher audits on big claims. Some states differ, so check local impact. This focuses on rates, not low-income aids like EITC. We can help with crypto and state ties. Your tax cut could reach thousands. Reach out to plan.
