New year, new tax relief

A new year ushers in a fresh start for many. Goals are renewed, finances are reprioritized and plans are set. This year, that included a refreshed tax code based on the idea hard-working Americans should keep more of what they earn. As the tax filing season begins, Americans are seeing how the Working Families Tax Cuts are providing across-the-board tax relief that promises bigger paychecks and more opportunities to get ahead.

The Working Families Tax Cuts prevented the largest tax hike in history and permanently restored key pro-growth tax provisions already driving domestic investment and economic growth. Tax rates have been lowered permanently. The standard deduction, which significantly simplifies tax filing for the approximately 90 percent of taxpayers who claim it, has been permanently increased. Likewise, the child tax credit was permanently increased to $2,200 per child and is now indexed to inflation. Idaho families also benefit from new school choice tax credits and enhanced education savings accounts, which help students afford the schools and training programs that best meet their needs.

The new law also fulfills some of President Trump’s signature campaign priorities, such as no taxes on tips and overtime, which offer significant relief for hourly workers who keep our communities running. Seniors are receiving new tax relief through a $6,000 bonus deduction. Health savings accounts were expanded, enabling taxpayers to save more of their money tax-free for health care expenses, while work to address root causes of the explosive increase in health care costs continues. Additionally, the law creates tax-advantaged savings accounts for children, which will help our sons, daughters and grandchildren build financial security.

The benefits are being felt not only this tax filing season, as many aspects of the law apply retroactively to 2025, but in the future as well. The U.S. Department of the Treasury projects the Working Families Tax Cuts will result in $7,200 in higher wages per American worker and $3,750 average tax cut per filer in 2026. Overall, the Department expects $100 billion more in total tax refunds in 2026 for American families, and as U.S. Treasury Secretary Scott Bessent noted, “For millions of families, such savings are the difference between making a mortgage payment, buying a car, or sending a child to college.”

The Working Families Tax Cuts’ permanent pro-growth policies also help small businesses hire, invest and innovate. The 20 percent small business deduction is now permanent, enabling job creation and spurring local economic activity. Permanent full expensing for new capital investment will boost domestic production. More generous interest deductibility was restored and made permanent, which will help finance critical investments. The death tax exemption was increased and made permanent, which will spare family farms, ranches and small businesses from that undue burden when they lose a loved one.

These new business incentives are already bearing fruit. In Rupert, Idaho, Pipeline Plastics opened a new manufacturing facility, employing more than fifty people, thanks to the permanent extension of the New Markets Tax Credit. There are similar projects popping up across Idaho and throughout America, with many more to come.

Taken together, these changes are creating an economy that works for working Americans. And, with policies like no taxes on tips and overtime, plus new tax relief for working families and seniors, low- and middle-income Americans are the biggest winners under this bill. Permanently lower federal tax rates and pro-growth policies provide Idahoans with the confidence they need to innovate, grow businesses and plan for the future. That is truly a fresh start for Idaho families and our economy.

A version of this column first appeared in the Washington Times.

Mike Crapo represents the state of Idaho in the U.S. Senate. He can be reached at crapo.senate.gov.