One Big Beautiful Bill Act Report Card

Data on the short-term effects of the One Big, Beautiful Bill Act enacted a year ago are becoming available.  They show that predicting the real effects of tax legislation remains a tricky business.

The average tax refund rose by 11.5% in 2026, compared to 2025, reaching $3,276.  The total number of refunds grew 6%, to 99,138,000. 

About 72.9 million taxpayers claimed one of the new “no tax on” deductions created by OBBBA.  Over 29 million taxpayers claimed the deduction for overtime, which was about 10 million more than had been projected by tax observers.  But the average deduction claimed was only $3,100, far below the cap of $12,500 on the overtime deduction.  There may have been some confusion about determining when one’s excess hours qualified for the deduction.

The deduction for car loan interest was claimed by 1.4 million filers.  One issue with this deduction is that it was limited to cars with a final assembly in the USA, which tax preparers had to verify.  Still, the IRS estimated that there were about 6 million loans made on purchases of qualifying vehicles, so the low number of claimants is puzzling.

Over 7.5 million taxpayers claimed the tips deduction, with an average claim of $7,000.  The deduction limit is $25,000, and there are income limits as well.  This year there will be new tip reporting requirements for employers, which may simplify tax filings for those who earn tips.

The business tax changes have received high marks from some tax observers, notably changes in international taxation, the permanence of the pass-through deduction, and the immediate expensing of R&D costs.  R&D spending had fallen when the costs were required to be capitalized, but since OBBBA R&D is up 5%.

For the first eight months of this fiscal year, the IRS collected $3.66 trillion in federal revenue.  This was $174 billion more, about 5% more, than was collected during the same period before OBBBA adoption.  Unfortunately, federal spending is increasing even faster, so the deficit continues to grow.

(July 2026)

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