Nobody enjoys filing their taxes. But this year, something was different. The tax code had some major improvements worth paying attention to.
The One Big Beautiful Bill Act, also known as the Working Families Tax Cuts, prevented a historic tax hike on American families. It also made important reforms that will benefit businesses and workers across the country. I could list the law’s many technical pro-growth provisions, such as 100% bonus depreciation, immediate expensing for research and development, or the permanent 20% small business deduction.
But what it really means is that American taxpayers get to keep more of their own money, and businesses are better able to invest, hire, and grow.
That’s the good news. Here’s the bad.
There’s a surprise tax that didn’t appear anywhere on your 1040, your W-2, or any form the IRS sent you.
It’s the cost of frivolous lawsuits, which are silently chipping away at family incomes and businesses’ bottom lines every year.
America’s tort litigation system costs families roughly $4,200 per household annually. For consumers, it has become a hidden surcharge baked into the price of housing, healthcare, groceries, and everyday goods. For small businesses, it means settling meritless claims not because they did anything wrong, but because fighting back costs even more.
And the consequences ripple across the economy. Businesses are forced to pass legal costs through to the cost of their goods and services or scale back hiring, expansions, and investments. These types of consequences have nothing to do with the healthiness of the market, but rather the chilling effect of predatory lawsuits. Trial lawyers win. Everyone else pays.
That drag on investment and growth has real consequences beyond any single business or consumer.
Right now, the U.S. economy is growing at about 2%. That’s a decent number. But 3% growth transforms lives. One additional percentage point speeds up economic advancement by more than a decade. This could accelerate wages, living standards, and opportunities for everyone.
At the federal level, Congress has tackled one part of the equation, and the Chamber continues to support it: the One Big Beautiful Bill Act.
It’s already encouraging to see businesses benefiting from the law. For example, the owner of Campbell Press in Lansing, Michigan, recently stated he was able to buy new equipment last year because of the tax credits, boosting efficiency and delivering a higher-quality product.
But tax policy alone won’t fix all the economic challenges, nor will it remove the hidden taxes.
We need to reform our legal system, the one that too often rewards jackpots over justice.
A key piece is curbing abusive third-party litigation funding, where outside investors bankroll lawsuits in exchange for a cut of the payout, incentivizing volume over merit.
And thankfully, the states also aren’t sitting idle. This year, 18 states have filed litigation funding disclosure bills. Two of those measures have been signed into law, one each in Utah and Mississippi. More legislative efforts are in the works.
TPLF disclosure is one critical piece. But broader litigation reforms matter just as much. And Florida is proof.
As of 2024, Florida families were paying around $5,768 each year due to tort litigation. The state used to have one of the worst legal environments in the country. For example, despite representing just 7% of homeowners’ insurance claims filed in 2019, Florida was home to over 76% of all insurance claims litigation nationwide. That imbalance drove out companies and choked off economic growth and opportunity.
But recent reforms have started to change the picture. Last year, State Farm cut auto insurance premiums by 10%, and litigation reform has been key to that progress. Stopping frivolous lawsuits reduced pressure on businesses and insurers, which lowered costs for consumers.
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Florida’s reforms and Congress’s tax cuts show what’s possible when lawmakers take action. At the U.S. Chamber, we’ll keep pushing because the path from 2% to 3% growth runs through both tax relief and legal reform. A year from now, on the next Tax Day, Americans deserve to file their returns knowing that both the visible and hidden taxes are getting smaller.
Stephen Waguespack is the president of the U.S. Chamber of Commerce’s Institute for Legal Reform.