The (In)accessibility of OBBB’s New Tax Cuts

JFI’s Lead Researcher on Guaranteed Income, Jack Landry, examines the effects of the One Big Beautiful Bill’s touted “working family tax cuts,” finding that higher-income workers will actually benefit more from the provisions.

From the paper:

Proponents describe the “One Big Beautiful Bill” (OBBB) as the largest tax cut in US history. However, most of its provisions simply extend tax breaks from President Trump’s first term. These extensions avert a tax hike, but do not change the tax rates people currently pay.

To offer tangible new tax relief branded as “working family tax cuts,” OBBB added several new provisions to the tax code: deductions for tip and overtime income, car loan interest, and an enhanced standard deduction for seniors. These cuts will reach few working families—fewer than 20 percent of workers are in any of the new categories. Even demographically eligible individuals may earn too little to benefit. For example, a single parent with two children earning $30,000 per year, including $10,000 in tips, would not qualify for any tax break under the new tipped income deduction.

The narrow and exclusionary structure of OBBB’s new tax deductions ensures a minimal impact on average tax bills. While attracting disproportionate attention, deductions aimed at middle and working class households are so minor that their fiscal cost is less than five percent of all tax cuts in the law. The lowest-income 60 percent of Americans will get an average tax break of just $100. Even considering all new tax breaks in OBBB (beyond the new deductions but excluding extensions of expiring provisions), the average benefit for the lowest-income 60 percent of Americans increases only slightly, to $140.

Find the paper here as a PDF.