Getting a tax refund can feel like a windfall. Of course, you are just getting your own money back. But since you receive a large amount of money at once, you get the chance to do bigger things with it, like pay down debt or use it for a big purchase. As a result, many people look forward to tax season when they get their generous direct deposit from the IRS.
For those eager to get a refund, 2026 is not going to disappoint. In fact, refunds next year could be bigger than usual, providing you with even more opportunity to make the most of the money that the IRS sends you.
Here are some details on the refund that many Americans are on track for next year, along with some insight into why the tax refund that comes in 2026 could be a supersized one.
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A huge tax refund is coming down the pipeline for most Americans
Treasury Secretary Scott Bessent has made some bold predictions regarding the refunds Americans are on track for next year, indicating they are likely to be gigantic.
And this may not be an exaggeration.
The Tax Foundation's analysis estimates suggest that the average refund could be around $1,000 higher in 2026 than it normally is. That extra $1,000 is coming your way because President Trump's "big, beautiful bill" ushered in generous tax cuts that reduced individual taxes by an estimated $144 billion in 2025. Those tax cuts applied retroactively to the start of the year, even though the bill wasn't passed until mid-year.
Since the tax rules changed in the middle of the year, in most cases, no adjustments were made to the amount of money being withheld from people's paychecks. In fact, the IRS did not adjust the withholding tables, so employers and workers would have had no reason to adjust the amount of federal taxes coming out of each paycheck.
The U.S. is a pay-as-you-go system, and money is withheld over time based on the amount that you are likely to owe at the end of the year. Since the withheld amount was calculated under the old tax rules and did not take into account the changes to the tax law that took place this year, most people had way more money withheld from their taxes than they actually owed.
When they file taxes in 2026, they will be filing their returns for the 2025 year, when these changes happened. This means that taxpayers will get back the extra they paid in -- to the tune of an extra $1,000 or so for the typical American, according to the Tax Foundation's projections.
While this will benefit anyone who had income tax withheld from their paychecks, the changes will especially impact certain people who are the beneficiaries of targeted new tax breaks, including:
- Parents who will see a larger maximum child tax credit
- Those paying auto loan interest, which is now tax-deductible
- Tipped workers and people who receive overtime, as tips and overtime pay are now partly deductible for eligible taxpayers
- Homeowners who can claim a larger SALT deduction for property taxes and state income tax payments
Be sure to use your extra tax refund wisely
If you are one of the many Americans who will get an extra $1,000 or so in your refund check next year, you have a real opportunity to use this money wisely. You could, for example, contribute extra to your retirement plans, pay down debt, or build a larger emergency fund.
The key is to be aware that this extra income is likely on the way to you and to make a plan that allows you to use the money from the tax breaks to help improve your finances over the long term. Many of the tax changes under the megabill are temporary and last only until 2028, so you may not enjoy this opportunity forever. It makes sense to make the most of it.
