Bigger refunds? It depends which “big beautiful” breaks you get. As 2026 filing season nears, President Trump is promising “the largest tax refund season of all time,” highlighting new 2025 tax cuts in his “big beautiful bill.” TPC has estimated that higher standard deductions, a larger child tax credit, a higher $40,000 SALT cap, and new deductions for seniors, tips, overtime, and auto-loan interest will cut 2025 income taxes by roughly $650 per family on average. About two-thirds of families are expected to get an average tax cut of $1,030, but only 16 percent of families in the bottom income quintile will see a cut (about $220 on average), compared with 91 percent in the top quintile (about $2,300). And because refunds reflect how much people had withheld during the year, not just their final tax liability, many families will see refund changes that do not match the size of their underlying tax cut.
Hegseth: Trump’s $1,776 “warrior dividend” to troops will be tax free. A new housing-linked “warrior dividend” created by the One Big Beautiful Bill Act (OBBBA) will send $1,776 to roughly 1.45 million service members, and the payments will be tax free, Defense Secretary Pete Hegseth said in a video highlighted by Bloomberg. OBBBA set aside up to $2.9 billion as a supplement to the basic allowance for housing, which is tax-exempt for those not living in government-provided housing. Hegseth said the one-time "warrior dividend" will go to nearly every enlisted member and officer except generals and admirals, including one-third of troops who live in free on-base housing.
Treasury debuts “Trump Accounts” portal for children’s tax-deferred savings. Treasury has launched a new “Trump Accounts” website to promote the administration’s tax-deferred investment program for children created by the OBBBA. Under the program, the government will deposit $1,000 into a section 530A Trump account for eligible children born between 2025 and 2028, and parents, relatives, and other qualified contributors can add up to $5,000 per year, with employers allowed up to $2,500 annually until the child turns 18. Funds must stay in the account until age 18 unless transferred to a 529A savings plan, and the IRS has released draft forms and FAQs to clarify eligibility.
The Daily Deduction will resume its regular schedule on January 5, 2026. Happy Holidays!
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