The right-back has signed a new contract extension at Huddersfield.
The new deal will keep him at the club until 2019, and Town also have the option to take the contract into the 2019-20 season if they wish.
Smith has contributed to all three of his side's opening three matches of the current Championship campaign.
He is widely expected to start for the team again in the Yorkshire derby with Barnsley this Saturday, and his boss believes there is something special about the 24-year-old that needed to be rewarded, adding that he still has plenty more to offer the club.
Wagner told the club's official website: “Tommy has worked very hard to improve his game since I arrived at the club back in November and he still has further room for development.
“That is exciting for everyone, as I already believe he is a top right-back for this division.
“Tommy’s character is excellent and I know he will keep working hard on the training pitch to get better and better. He is another player who shows the ‘Terriers Identity’ on the pitch in every game and he deserves this contract from us.”
Since making his league debut against Sheffield Wednesday in front of the television cameras in 2013, Smith has gone on to make 104 starts for Huddersfield, earning one goal.
Huddersfield have enjoyed an unbeaten start to the new Championship season and sit in third place following their last-gasp 1-1 draw at Aston Villa on Tuesday.