The average American is on track to get a substantial amount of extra money from the government in 2026. Here's where this money is coming from and who's likely to get it.
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An extra $1,000 is on the way to the average American in 2026
According to the Tax Foundation, average tax refunds in 2026 are expected to be around $1,000 higher than they have been in the past. These higher refunds are expected to add up to around $100 billion in additional refunds that will be returned to workers this year.
Why are Americans getting an extra $1,000 from the government in 2026?
Tax refunds are expected to be much larger this year because of the impact of President Donald Trump's "big, beautiful bill." The act created new opportunities for tax savings in 2025.
Workers have been paying their 2025 taxes all year because the U.S. is a pay-as-you-go system. Most people have taxes withheld from their paychecks by their employer and sent to the IRS. Some self-employed workers and business owners pay quarterly estimated taxes.
Regardless of the method, Americans who prepaid taxes probably overpaid because they didn't account for the tax code changes made by the "big, beautiful bill."
"Big, beautiful bill" tax refunds are unusually high
The IRS made a decision that's resulting in unusually large tax refunds in 2026. It didn't adjust withholding tables to account for changes to the tax rules. This means employers kept withholding taxes from workers' paychecks based on the old rules, not the new ones.
The Tax Foundation estimates that the "big, beautiful bill" caused a $144 billion reduction in individual taxes owed in 2025. Since the IRS didn't adjust withholding tables, employers withheld way more than workers owed.
Who gets an extra $1,000 tax refund?
Trump's mega-bill reduced taxes in multiple ways. The more reductions that affect you, the more likely you are to get a larger refund. New reductions include:
- An increased child tax credit
- An increased standard deduction
- An increased state and local tax deduction
- A new deduction for up to $10,000 in auto loan interest
- A new deduction for up to $25,000 in income from tips
- A new deduction for up to $12,500 in overtime income
There are income limits on many of the new deductions, so a tax professional or tax software can help you determine whether you qualify.
What to do with your larger tax refund
If you get extra money back from the IRS, you may want to use it to pay down debt, shore up your emergency fund, or invest. Investing can help you grow that $1,000 into much more over time.
