Politicians on the campaign trail often promise that life will improve under their administration, and lowering tax obligations can elicit excitement.
During his second campaign, leaning into proposals from his first year in office, President Donald Trump proposed sweeping changes, building on proposals from his first term.
Chief among them were extending provisions of the Tax Cuts and Jobs Act, called the TCJA, eliminating taxes on certain types of income and reducing taxes for businesses.
After being elected, Trump’s One Big Beautiful Bill passed, putting some of those promises into law, including extending key TCJA provisions and creating new deductions for tips, overtime pay, car loan interest and seniors.
But not every proposal became law as originally envisioned. Here’s what has happened so far and how Trump’s tax agenda is affecting taxpayers now.
[READ: Trump’s One Big Beautiful Bill Includes New Tax Breaks: Will You Benefit?]
Tax Cuts and Jobs Act Provisions Are Now Permanent
The TCJA was set to expire after 2025, but the OBBB was signed into law on July 4, 2025. It made key individual provisions permanent for future tax years. The law made seven individual income tax rates permanent, ranging from 10% to 37%.
There is also a larger standard deduction for tax year 2026: $16,100 for single filers, $32,200 for married couples filing jointly and $24,150 for heads of household.
The child tax credit is $2,200 per child under 17, made permanent and indexed for inflation starting in 2026.
The state and local tax deduction cap temporarily rose from $10,000 to $40,000 for 2025 through 2029, increasing by 1% each year. For 2026, the cap is $40,400, or $20,200 for married couples filing separately.
This deduction begins to decrease if your modified adjusted gross income is more than $505,000 ($252,500 if filing separately), but it will never drop below $10,000. The change aims to help itemizing taxpayers in high-tax states.
Richard McWhorter, a certified financial planner and managing partner with SRM Private Wealth in Beverly Hills, California, cautions that extending the cuts could come with economic trade-offs, even if it spurs growth.
“People are happy when taxes go down, but the ramifications from lower revenue from the reduction in taxes may still cause a spike in our federal budget deficit,” McWhorter says.
“So, the problem with what the Trump administration has done may cause larger structural issues going forward,” he adds.
New Tax Breaks for Tips, Overtime and Seniors
Although Trump pushed to eliminate taxes on tips and overtime, those proposals did not become outright tax exemptions. Instead, the law created new federal income tax deductions.
Now, through 2028, eligible workers can deduct up to $25,000 in qualified tips. The deduction begins to phase out for taxpayers with MAGIs above $150,000, or $300,000 for married couples filing jointly.
Eligible workers can also deduct up to $12,500 in qualified overtime compensation, or $25,000 for married couples filing jointly. The deduction begins to phase out at $150,000 for single filers and $300,000 for married couples filing jointly.
“For the average taxpayer, they’re worth about $1,400,” says Romeo Razi, CPA and founder of TaxedRight in Las Vegas.
“That’s a lot if you’re a lower-wage worker, especially in this economy with inflation going bat-crazy. The main limitation they have to think about is that this only helps you with federal income tax, not your Social Security and Medicare taxes.
So, if your wages are already low, you may not get any benefit because you didn’t have any federal income tax in the first place,” he says.
And while Trump tried to eliminate federal income taxes on Social Security benefits, that also didn’t happen. Instead, there is an enhanced deduction of up to $6,000 for taxpayers age 65 and older, or up to $12,000 for an eligible married couple.
The deduction applies for tax years 2025 through 2028 and begins phasing out above $75,000 in MAGI for individuals and $150,000 for joint filers.
The deduction is reduced as income rises above those thresholds and is fully phased out at higher income levels. It’s in addition to the existing senior standard deduction and available whether you itemize or not.
Social Security benefits remain subject to existing federal tax rules — depending on income, up to 85% of benefits may be included in taxable income.
[Read: Tax Changes You Can Expect in Retirement]
Some Car Buyers Can Deduct Auto Loan Interest
One of the most notable new consumer provisions wasn’t a major component of the original TCJA. It’s a deduction for car loan interest.
From 2025 through 2028, you might be eligible to deduct up to $10,000 of interest paid on a loan for a new personal vehicle.
To qualify, the vehicle must be assembled in the United States. Additionally, the loan must have been incurred after Dec. 31, 2024, and generally must be secured by a first lien on the vehicle.
The deduction begins phasing out for taxpayers with MAGIs above $100,000, or $200,000 for joint filers, and is reduced to $0 for single filers earning $150,000 or more and joint filers earning more than $250,000.
This deduction is set to expire after 2028 unless Congress extends it.
More Tax Breaks for Businesses, But the Corporate Rate Remains 21%
To boost the economy, Trump sought to reduce the corporate tax rate from 21% to as low as 15% for companies that produce goods in the United States.
That didn’t go into effect, but businesses did receive several significant tax breaks, including permanent 100% bonus depreciation for certain eligible property acquired after Jan. 19, 2025, as well as changes affecting business interest expenses and other provisions.
According to McWhorter, these changes did some good.
“It sped up the process of buying things, for sure,” he says. “Does that pull the economy forward? Yes. But in September the U.S. budget comes out and we’ll know if it affected the national debt.”
As for the corporate rate reduction that didn’t make the cut, McWhorter believes it could have been beneficial. In theory, he says, it would have enabled companies to raise salaries and hire more employees.
Federal Income Taxes Haven’t Been Replaced by Tariffs
Trump has repeatedly promoted tariffs to raise federal revenue, encourage domestic production, and reduce U.S. reliance on foreign goods. He has also touted tariffs as a way to eliminate federal income taxes.
That hasn’t happened, says Lou Barberini, a San Francisco-based certified public accountant (CPA) and financial advisor.
“The tariffs did not result in anything positive for taxpayers,” Barberini says. “It’s been horrible for almost everyone.” Instead, common goods have become more expensive, adding pressure to already tight budgets.
In 2026, the administration continues to advocate for tariffs as part of its broader economic and trade policy. Federal income taxes have not been replaced by tariffs or other measures.
The IRS Has a Smaller Workforce
The number of people working for the IRS has been sharply reduced, ostensibly to cut government spending.
Soon after taking office, mass staffing cuts began. The agency’s workforce has fallen significantly from 2025 levels. At the beginning of 2025, the IRS had approximately 102,000 employees, and at the end had roughly 75,000.
When the cuts were first proposed, Noah Rosenfarb, CPA and founder of Wealthrive, a tax strategy firm in Parkland, Florida, predicted audit rates and enforcement actions would decline.
In 2025, the IRS closed 497,621 tax return audits, down from 505,514 the previous year.
In Trump’s April 2026 budget proposal for fiscal year 2027, the administration proposed cutting the IRS’s annual appropriated funding by $1.4 billion, or 12.5%. The proposal would cut funding for IRS enforcement by 18%.
Filing Taxes Hasn’t Become Simpler
With the OBBB, Trump promised to simplify the tax code. That has proven tricky, though. His first-term idea of turning Form 1040 into a postcard-size form never fully panned out.
While the IRS did redesign the form with modest updates, each of the new deductions has its own eligibility rules, income phaseouts and reporting requirements. To claim them, taxpayers must use the newly created Schedule 1-A.
Trump Accounts, a new type of traditional IRA for eligible children, can add more steps. Contributions began July 4, 2026, and the annual contribution limit generally is $5,000, although certain contributions are subject to separate rules. Parents must track contributions to avoid exceeding applicable limits.
Charitable giving rules also changed starting in 2026. People who take the standard deduction can write off up to $1,000 in cash donations ($2,000 for married couples filing jointly). Those who itemize can deduct only the cash gifts that exceed 0.5% of their adjusted gross income.
So while Form 1040 was updated, with the added schedules, limits and tracking, the overall system isn’t necessarily easier to understand or navigate.
[Read: Could Trump’s $1K Retirement Accounts for Babies Replace Social Security? What the Experts Say]
What Lies Ahead for U.S. Taxpayers
In many ways, Trump delivered on his tax campaign promises, Razi says.
“He couldn’t completely get rid of taxes he wanted to, but he was able to get tax reductions on the four items he campaigned on: tips, overtime, seniors tax deduction and car loan interest,” he says.
“However, people need to keep in mind these are only temporary because after 2028 all these tax reductions go away. And due to inflation and the changing political climate, I’d be shocked if any of these things were renewed,” he adds.
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Trump’s Tax Reforms: Experts Weigh In on What Happened and the Impacts originally appeared on usnews.com
Update 08/21/26: This story was published at an earlier date and has been updated with new information.
