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Americans spoke up — and Washington listened
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Hello John,

‌

As we step into 2026, the economic landscape has shifted significantly.

‌

The Working Families Tax Cuts bill, signed into law last July, saw its most
impactful provisions go into effect on January 1.


In this edition, we’ll break down the key provisions of the law and what they
mean for your wallet, your family, and your future. Here are a few key points
to remember:

* Addresses the rising cost of living — The bill overhauls the tax code to
provide relief as everyday costs continue to rise, with sweeping reforms now
signed into law.
* Adds more tax benefits for working Americans — It preserves the successful
2017 tax cuts while expanding them, strengthening relief for middle-class
families.
A quick (but important) note: People are free to disagree with some of these
provisions (even we didn’t support all of them), but no one can accurately say
that this law ignores the middle class or doesn’t address affordability.

‌

1. Making tax relief permanent: For years, taxpayers faced a “tax cliff” at
the end of 2025, as many provisions from the 2017 Trump tax cuts were set to
expire.

‌

The Working Families Tax Cuts bill made several of these permanent, providing
long-term certainty for household budgeting.

* Lower individual rates — The seven lower tax brackets established in 2017
are now permanent.
* Enhanced standard deduction — To help simplify filing and provide immediate
relief, the larger standard deduction is here to stay. For 2026, this sits at
$32,200 for married couples and $16,100 for single filers, and it will increase
every year, indexed to inflation.
* On the downside — The new law raises the state-and-local tax (SALT)
deduction cap from $10,000 to $40,000 for those with incomes under $500,000.
This provision was necessary to pass the bill into law, but it essentially
protects liberal politicians in high-tax states by having federal taxpayers
subsidize their tax-and-spend policies.
2. Targeted “take-home” pay boosts: The new law also contains new deductions
for service and blue-collar workers.

* No tax on tips — Workers in tipped industries can now claim an
above-the-line deduction of up to $25,000 on qualified tip income.
* No tax on overtime — Under the new “Working Families” provision, hourly
workers can deduct up to $12,500 ($25,000 for joint filers) of qualified
overtime pay.
3. Support for families and seniors: The Working Families Tax Cuts bill
introduces new mechanisms to help with the “sandwich generation” challenges of
raising children while caring for aging parents.

* Child tax credit — The CTC has been permanently set at $2,200 per child, a
$200 increase from previous levels, with new inflation adjustments starting
this year.
* The “Trump Account” — A new type of savings vehicle for children under 18,
allowing for up to $5,000 in annual contributions. For those lucky enough to
have a newborn between 2025 and 2028, the federal government is providing a
$1,000 seed contribution to kickstart their savings.
* Senior deduction — Filers aged 65 and older now qualify for an additional
$6,000 deduction, helping protect fixed incomes from the sting of inflation.
4. Health care and transportation shifts: While the bill offers many tax cuts,
it also changes how we pay for essential services.

* Health savings account expansion — Starting this year, Bronze and
Catastrophic health plans bought through the Obamacare exchanges are now
HSA-compatible, allowing more Americans to save for medical costs tax-free.
Additionally, the bill allows for tax-free HSA withdrawals to pay for direct
primary care (DPC) fees (up to $150/month).
* Car loan interest — In an effort to support domestic manufacturing and
middle-class buyers, interest on loans for U.S.-assembled vehicles is now
deductible up to $10,000 for eligible taxpayers.
The bottom line on affordability: By making tax cuts permanent and introducing
specific deductions for overtime and tips, the Working Families Tax Cuts bill
aims to put more liquid cash into the hands of the working class.

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As you receive your first paychecks of 2026, keep a close eye on your
withholdings. The IRS has issued new procedures to account for these changes,
and your take-home pay may look a little different this month.

‌

Lawmakers — whether they supported or opposed the bill — need to hear from
you. Speak up now and let them know you’re paying attention
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.


Make your voice heard
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As always, thank you for all you do!

‌

Best,

‌

Joe Eule
Americans for Prosperity






Americans for Prosperity believes freedom and opportunity are the keys to
unleashing prosperity for all. We are a community of millions of concerned
citizens advocating for solutions based on proven principles to tackle the
country's most critical challenges.






Americans for Prosperity

4201 Wilson Blvd, Suite 1000

Arlington, VA 22203



This email was sent to:

[email protected]




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