Tax Foundation analysis highlights biggest OBBBA beneficiary states, counties

The One Big Beautiful Bill Act, signed into law in July 2025, is poised to deliver significant tax cuts across the United States, but a new analysis from the Tax Foundation confirms that the impact will vary widely by state and county.

OBBBA, which makes permanent many of the individual and business tax changes first enacted in the 2017 Tax Cuts and Jobs Act, is estimated to reduce federal taxes on average for individual taxpayers in every state.

However, the size of the average tax cut differs sharply depending on geography and income levels, according to the Tax Foundation analysis published last week.

Where tax cuts are the deepest

Taxpayers in Wyoming, Washington, and Massachusetts are projected to receive the largest average tax cuts in 2026, with reductions of $5,375, $5,372, and $5,139, respectively. In contrast, West Virginia and Mississippi are expected to see the smallest average cuts, at $2,503 and $2,401 per taxpayer.

Digging deeper to the county level, the largest average tax cuts are concentrated in mountain resort towns such as Teton County, Wyoming, where the average cut is estimated at $37,373 per taxpayer in 2026. Rural counties will see much smaller benefits, with Loup County, Nebraska in particularly projected to ultimately enjoy average cuts of just $824 per individual .

OBBBA’s provisions include a temporary increase in the cap on state and local tax (SALT) deductions to $40,000 for 2025 through 2029, before reverting to $10,000 in 2030. That's expected to be especially consequential with varying impacts across jurisdictions.

“The $40,000 cap on state and local tax (SALT) deductions ($10,000 cap post-2029) will tend to have the greatest impact on taxpayers in higher-tax localities on the coasts of the US,” Tax Foundation said.

Looking at the usual wealth hubs, the Tax Foundation's analysis found the average tax cut per taxpayer would be $4,141 in California, $3,933 in New York, and $4,998 in Florida. While all three states will see above-average reductions, the benefits are distributed unevenly within each state, with higher-income counties and those with larger itemized deductions seeing the greatest gains.

“Across all individual tax filers throughout the country, the average tax cut per taxpayer will be $3,752 in 2026,” the analysis found

The OBBBA also makes permanent several business tax provisions, including full expensing for domestic research and development and 100 percent bonus depreciation, which are expected to encourage investment and job creation. The Tax Foundation estimates the law will create about 938,000 full-time equivalent jobs over the long run, with more than 132,000 jobs in California and 81,000 in Texas.

Mounting deficits, growing inequality

Still, there's no getting around the law's more immediate fiscal impacts. The Tax Foundation projects that the major tax provisions will reduce federal tax revenue by $5 trillion over the next decade, and increase the federal budget deficit by $3.8 trillion after accounting for economic growth and spending cuts.

The Committee for a Responsible Federal Budget recently sounded the alarm on another dubious milestone for fiscal policy as the gross national debt crossed $37 trillion, with the OBBBA including a $5 trillion increase in the debt limit to avoid a potential government default.

"Spending and revenue are woefully out of balance – to the tune of nearly $2 trillion annually and rising – and instead of addressing this imbalance, Congress keeps choosing to make things worse," CRFB President Maya MacGuineas said in a statement.

While OBBBA’s supporters highlight its potential to fan economic growth and help swerve away from numerous tax increases that had been scheduled to hit millions of Americans, critics point to its regressive structure and the risk of exacerbating income inequality.

According to a Pew Research Center survey administered before OBBBA made it through the Senate, nearly half of Americans opposed the legislation, with 54% saying it would have a mostly negative effect on the country in the coming years.

"A 55% majority says the bill would help high-income people," the survey said. "By contrast, 59% say it would hurt lower-income people and 51% think it would hurt middle-income people."

That tempered consensus was substantially supported by the Budget Lab at Yale, which recently analyzed the combined impact of OBBBA and the Trump administration's tariffs on US households. 

"We find that the combination of the OBBBA and 2025 tariffs will reduce resources on average among all income groups except the top decile," the Budget Lab said based on its projections of annual changes to after-tax-and-transfer income over the next years from 2026 up to 2034.

"Those in the bottom decile will see an average reduction in after-tax-and-transfer income of about $2,700, whereas those in the top decile will see an increase of nearly $8,000 on average."