Ashley Norwood’s ears perked up when she first heard about President Donald Trump’s campaign promises to not tax tips and overtime. As a bartender, Norwood earns plenty of tips, and her husband, a diesel technician, works a lot of overtime. Trump’s tax cuts seemed tailor-made to help her family of five, and Norwood said she voted for Trump in 2024 largely because of them.
Even before the 37-year-old resident of Bluffton, South Carolina, filed her taxes this year, she and her husband had made a wish list for how they might spend their refund. After paying down debts, Norwood hoped to have money left over to help pay for a family vacation and, maybe, splurge on a new bed.
The roughly $10,000 refund she ultimately received was more than enough. She bought an extra-large mattress called a Wyoming King; it was so big that her husband had to build a custom frame.
“We are not hurting financially,” Norwood said, adding that her household income is roughly $200,000. “But it was really great to have that extra money and say, ‘We can pay off what we do owe and do something nice for ourselves and the family.’”
Across the country, as Americans are filing their returns, the full effect of the tax cuts that Republicans passed last year has started to come into view. While most Americans owe at least somewhat less tax as a result of the law, the benefits are unevenly and, to some tax experts, arbitrarily distributed.
That is because they depend on whether someone works for tips or overtime — or qualifies for one of the other new tax cuts, like an additional deduction for people 65 and older. And even for those who can claim one of the new tax cuts, the savings will reflect how much money they make. Someone who does not owe much in taxes gains little from a tax cut.
Like Norwood, Nicole Mendoza earns tips, as a server. At 68, she works a couple of shifts a week at a Cracker Barrel in Canton, Georgia, to supplement her Social Security income and savings. All told, Mendoza said, she earned about $38,000 last year and paid $551 in federal income taxes.
“I got back every penny,” Mendoza said of filing her taxes.
The New York Times spoke with three dozen Americans up and down the income ladder to understand how the tax cuts are reshaping their finances. Most were among the hundreds of people who had responded to a Times survey about their taxes, while others were interviewed as they waited at a clinic that provides free tax-filing services for working-class Americans.
Many of the taxpayers said they had received their largest refund in years, money that is going toward paying down credit card debt, catching up on bills, padding savings accounts or covering the cost of a vacation. Among the biggest winners were higher earners and large companies. Some did not gain much of anything.
Overall, the average tax refund is $3,521, according to Internal Revenue Service data through March 27, roughly 11% higher than it was a year earlier. While that is a sizable increase, it has so far fallen short of some analysts’ expectations of what the tax law would deliver.
Much of the law was dedicated toward extending the tax cuts Republicans first passed in 2017 during Trump’s first term. To go beyond just maintaining the status quo, Republicans sprinkled on an additional set of cuts that took effect in 2025, including temporary versions of Trump’s campaign promises, as well as slight increases to the standard deduction and the child tax credit.
Those new tax cuts had been largely imperceptible to most Americans, since the IRS did not immediately update how much tax was withheld from paychecks after the law passed. It was only when Americans began filing their taxes this year, and potentially receiving bigger refunds, that the policy changes became apparent. Even then, roughly a third of Americans were not expected to receive a new tax cut from the law, according to an analysis by the Tax Policy Center, a nonpartisan think tank.
Still, Republicans are betting that larger-than-normal refunds for many Americans will make an impression, potentially helping the party in the midterm elections this fall.
Some Low-Income Americans Left Out
Like millions of other Americans, Heather Brown, a scheduling manager for a home improvement company, looks forward to the beginning of tax season. She makes roughly $46,000 a year and says she relies on her tax refund to catch up on her heating and electricity bills from the winter. This year, she was planning to put some of the money she got back toward buying a new car.
She did not deduct any tips or overtime earnings on her taxes, and her roughly $1,800 refund this year ended up being much less than the $4,500 she got back last year. Now she is not sure how she is going to replace her beat-up 2006 Acura, which she doesn’t think can pass inspection this spring.
“So now we’re going to have to figure out where to tighten up in other areas so we can get that money a different way,” said Brown, a 48-year-old resident of York, Pennsylvania.
To offset some of the cost of the tax cuts in last year’s law, Republicans cut funding for health care programs, including Medicaid, and food stamps, meaning that the law overall will harm poor Americans more than it helps them. The law also did not include an extension of more generous tax subsidies for Affordable Care Act health insurance plans. As a result, Brown said, her monthly premium soared, and she dropped her insurance.
“The tax cuts they’re talking about, they’re not benefiting people down at the bottom like I am,” she said.
Beyond the cuts to health care and food aid, the law included some tax increases, including a new requirement that at least one parent have a Social Security number for a household to receive the child tax credit. That could cut tax refunds for mixed-status families with parents without permanent legal status and American-born children.
“We’re penalizing U.S. kids because their parents are undocumented,” said Brian Pastori, deputy director of the Community Economic Development Center in southeastern Massachusetts.
Meant for the Middle Class
Republicans were hoping to target the law’s new benefits at the middle class and blunt the criticism that their tax cuts favor the rich. To do so, they put income limits on the new tax breaks, along with a host of other rules intended to limit their overall cost.
For single filers, the tax breaks for tips and overtime become less generous for people making more than $150,000, while the additional deduction for older people starts to shrink for individuals with more than $75,000 in income. (The income limits double for married couples.) But in some cases, especially for retirees, annual income can be an incomplete measure of financial health.
Before Kim Harkins, 73, and her husband retired, they made good money, around $300,000 a year, she said. In retirement, like many Americans, they live off their savings, meaning their income is smaller than it used to be. Harkins said she and her husband had an income of about $100,000 last year, the sum of their Social Security benefits, annuity payments and withdrawals from their retirement accounts.
“We’re very comfortable,” Harkins said, adding that she and her husband own three homes across the country. “On paper, we’re millionaires. We have a boat.”
Harkins said she was ambivalent to find that the new deduction for older Americans resulted in a $5,384 tax refund for her this year. She said she would use the money on a trip to Ireland she had planned for later this year.
“It’s embarrassing to get that money back,” she said, adding that she would rather see her tax money spent “on poverty programs and food and housing.”
Refunds are an imprecise way to look at the consequences of a tax cut. Typically, about two-thirds of households receive a refund, while the remaining third may have to pay more to the IRS. The size of a tax refund can depend on a variety of factors beyond policy changes, including how much in tax someone decides to withhold from every paycheck.
As a result, many Americans may just have to pay less to the IRS because of the latest changes, rather than receive a larger tax refund. But Republicans and Trump have advertised the benefits from the cuts in terms of larger refunds, and many Americans budget around them.
Matt Dangel, a 39-year-old machinist, treats his annual tax refund like a “mini-savings account,” he said. He also intentionally withholds more taxes from every paycheck than is necessary, he said, using the roughly $6,000 he gets back every year to cover bills like his property taxes, homeowners insurance and car registration.
Dangel, who said he and his wife together make around $98,000 a year, regularly works overtime. Given that Trump has branded his new tax break as “no tax on overtime,” Dangel said, he was looking forward to a much larger refund than usual.
But as he dug into the fine print of the tax break, he realized that the new deduction applies only to a slice of his overtime earnings. And as with the tips deduction, the payroll taxes that fund Social Security and Medicare are unaffected by the overtime tax break.
Ultimately, said Dangel, who lives in Scotland, South Dakota, his refund was just $120 more than it was last year, though it was still enough to cover the cost of new phones for him and his wife.
“I was certainly expecting there to be more than $120 worth,” he said.
New Benefits for the Rich, but Not the Superrich
The new tax cuts will not do much for the wealthiest Americans. For them, the most valuable changes were ones that Republicans passed in 2017 — and that the party made permanent last year. That included a lower top marginal tax rate of 37%, which applies to earnings above $640,600 for single filers in 2026; a deduction for business profits; and a higher wealth threshold for applying the estate tax.
For corporations, the drastically lower 21% tax rate they won in 2017 had already been a permanent feature of the code. Some tax breaks that had lapsed, including the prized ability to write off investment and research expenses at once, were restored. Those changes saved Amazon roughly $8 billion in cash taxes last year, part of a broad drop in corporate tax revenue.
One of the most expensive additions that Republicans included in last year’s law was to lift the $10,000 limit on the state and local tax deduction, partly reversing what some policy experts considered the most progressive change they made in 2017.
The law increased the maximum deduction to $40,000 for 2025, though that full write-off is available only to households making $500,000 or less. The more a household makes over that threshold, the less it can deduct. People making more than $600,000, for example, are able to write off $10,000 in state and local taxes.
Trent Bohacz, a 43-year-old corporate executive from Prospect Heights, Illinois, knew that he was primed to benefit from the higher limit on the state and local tax deduction. He and his wife made around $515,000 last year and paid about $39,000 in state and local taxes.
But he was still surprised by the $14,000 refund he received from the IRS. “I thought it could be five figures, but it was still a little more and a welcome surprise,” Bohacz said. He said he planned to put the money toward paying for a new car for his 16-year-old daughter.
“We are, by definition, the people that benefited the most,” he said.