These 8 States Will See the Biggest Tax Cuts in 2026

If you're looking to crush your tax debt, you may feel inspired by the One Big Beautiful Bill Act (OBBBA). It was signed into law this summer and makes the most significant legislative changes to federal tax policy since the 2017 Tax Cuts and Jobs Act.

Overall, the OBBBA makes permanent the individual tax changes first put in place by the 2017 Act, which avoids a tax hike on an estimated 62% of taxpayers in 2026. It also provides additional tax cuts to individuals.

So what does that actually look like across the country? The Tax Foundation crunched the numbers to find out which states stand to benefit most in 2026.

Based on estimations from the Tax Foundation, taxpayers in Wyoming will see the largest average tax cut in 2026 at $5,375. When you dig down deeper, Teton County in Wyoming will see an average tax cut of $37,373 per taxpayer in 2026. That's the highest in the country.

Overall, the largest cuts are found in mountain resort towns and likely represent the residences of business owners and higher-earning taxpayers.

Taxpayers in the state of Washington are set to see the second-largest average tax cut in 2026 at $5,372. Another interesting aspect of the report is the estimation that the OBBBA will create about 938,000 full-time equivalent jobs over the long run.

While a state like California will see more than 132,000 jobs, Washington is expected to do fairly well, too, with approximately 27,458 new jobs.

The Bay State rounds out the top three states expected to see the largest average tax cuts in 2026 at $5,139. According to the Tax Foundation, specific tax changes also show variation by geographic location. For instance, the $40,000 cap on state and local tax deductions will likely have the greatest impact on taxpayers living in higher-tax locations on the coasts of the U.S.

The state known for its sunshine comes in fourth when it comes to the biggest tax cuts in 2026. Falling just short of $5,000, the average tax cut is expected to be $4,998. When you look at the entire state, some counties in the far south will see some of the biggest average tax cuts.

For example, the average tax cut in Palm Beach County will be more than $12,000. The $40,000 cap on state and local tax deductions likely has the greatest impact on taxpayers in higher-tax locations.

Another state in the eastern part of the country comes in fifth for the largest average tax cuts in 2026 at $4,683. This may be especially welcome news for taxpayers in the state, given that Connecticut's tax system is ranked 47th overall on the 2025 State Tax Competitiveness Index from the Tax Foundation.

The average tax cut in 2026 for taxpayers in New Hampshire will be $4,597. Based on the analysis, across all individual tax filers throughout the country, the average tax cut per taxpayer should be about $3,752 in 2026.

It falls to $2,505 in 2030 due to certain individual changes expiring, but then rises again in 2035 as inflation increases the nominal value of the permanent cuts.

For Colorado, the average tax cut in 2026 will be $4,260, ranking it among the top 10 states. When looking at the county level, Pitkin County in Colorado ranks among the top places for the largest average tax cuts.

The county will see an average tax cut of $21,363 per taxpayer in 2026. This falls in line with the overall trend of the largest cuts being found in mountain resort towns.

If you live in Nevada and want to have some extra money for entertainment, then the fact that the state will see one of the biggest tax cuts in 2026 is welcome news. The average tax cut here will be $4,220.

According to Tax Foundation estimates, the numbers are based on conventional revenue estimates at the national level and then allocated to individual tax filers in counties using data from the IRS.

You may want to prepare yourself financially for tax cuts coming in 2026. The OBBBA means taxpayers will see cuts, with some filers living in certain states seeing an average tax cut above $5,000. The law provides new deductions for tipped and overtime income, along with an expanded child tax credit and standard deduction.