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Americans See Employment and Earning Retention Gains Thanks to Working Family Tax Cuts

Sen. Steve Daines, R-Mont., speaks during a news conference in the Capitol. (Photo By Tom Williams/CQ Roll Call)

Pedro Boccalato Rodriguez-Aparicio is a journalism fellow at The Daily Signal. Send an email to Pedro.

Members of Congress are pointing to rising wages and private-sector job growth as evidence that the Working Families Tax Cuts Act is delivering results for American workers and businesses.

The law, signed by President Donald Trump on July 4, 2025, reduced taxes on tips, overtime pay, and certain retirement benefits, while expanding the child tax credit. Supporters say the changes have increased take-home pay, strengthened hiring, and given families and entrepreneurs greater financial certainty.

“Letting American families keep more of their hard-earned money, rather than spending it on wasteful government boondoggles, is one of the most important victories we can achieve in Congress,” Sen. Mike Lee, R-Utah, told The Daily Signal. “Thanks to the Working Families Tax Cut, the average tax refund in 2026 is over 10% higher than it was in 2025.”

A Heritage Foundation analysis found that private-sector employment among U.S.-born workers increased by more than 2.6 million over the past calendar year, while the number of employed foreign-born workers declined by 21,000 over the same period. Heritage economists attribute the shift to stronger private-sector growth alongside reductions in federal employment under the Trump administration.

Under former President Joe Biden, Heritage analysts argue, growth in public-sector jobs often made the labor market appear stronger than private-sector hiring trends alone would suggest. Trump’s downsizing of the federal workforce, paired with tax relief for workers and businesses, has reversed that dynamic, the report said.

In November, for example, the private sector added 69,000 jobs while 41,000 federal employees were laid off, according to the analysis.

“Mr. Trump is simultaneously saving taxpayers money by clearing out the deadwood in the bureaucracy while boosting economic growth,” Heritage Foundation Chief Economist E.J. Antoni wrote in the report.

Republican lawmakers say the effects of the tax changes are already being felt this filing season. Rep. Mark Harris, R-N.C., told The Daily Signal that Americans are “already seeing the difference this Tax Day” because of legislation passed last summer.

“Families aren’t just filing taxes,” Harris said. “They’re keeping more of what they earn.”

“Whether it’s no tax on tips and overtime, a stronger child tax credit, or relief for seniors, these pro-growth, pro-America policies are putting more money back in the pockets of the hardworking people who need it most,” he added.

Harris said middle-class Americans and small business owners are using those savings to invest, expand operations, and hire additional workers.

“Small businesses now have the certainty to expand and hire more North Carolinians. Family farms can pass on what they’ve built,” he said. “And seniors get to hold onto more of what they earned over a lifetime of work.”

Rep. Marlin Stutzman, R-Ind., echoed those remarks, saying the law has allowed entrepreneurs to reinvest more of their earnings into their businesses.

“The Working Families Tax Cuts Act has saved Americans billions by removing taxes on tips, overtime, and Social Security,” Stutzman told The Daily Signal. “When money isn’t going toward wasteful government spending, entrepreneurs have more left to invest where it matters — on their businesses.”

“Hoosiers in Indiana’s Third District, and Americans across the country, are already feeling the positive effects,” he said.

Critics of the law have argued that the tax cuts could worsen the federal deficit or disproportionately benefit higher earners, claims supporters dispute by pointing to employment gains and rising after-tax income for working families.

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