Many Americans could receive even larger tax refunds during the 2026 filing season under changes in President Donald Trump’s “Big and Beautiful Bill.” However, the extent to which this is the case is debatable.
President Trump’s bill, signed into law in July, added several tax cuts for 2025, and the IRS did not adjust payroll withholding. As a result, many workers are paying too much tax and will have to pay it back when they file their taxes in 2025, experts say.
The average tax refund could increase by “more than $1,000” in 2026, the White House announced this week. The release cited multiple media reports citing investment bank Piper Sandler’s investigation in early October. The memo said President Trump’s “retroactive tax cuts could average about $1,000 per return, but could be significantly higher for some filers.”
The White House announcement also included a chart with January data from the Tax Foundation, a nonprofit think tank, showing that the estimated average refund could increase by $748 to $3,800 from $3,052 for the 2024 tax year.
Social Security Administration Administrator and IRS CEO Frank Bisignano told CNBC’s “The Exchange” on Wednesday that an additional $200 billion will be earmarked for tax refunds in 2026.
A study by Piper Sandler in early October estimated that President Trump’s 2025 tax cuts could increase tax refunds by about $91 billion in 2026. By comparison, a January analysis by the Tax Foundation, based on private sector data, said refunds could increase by up to $100 billion in 2026.
The estimates come as Republicans continue to push President Trump’s 2025 bill (which they now call the “Working Families Tax Cut”) and as President Trump promises that 2026 will be “the biggest tax refund season in history.”
President Trump recently announced new economic policies as many Americans struggle with rising costs of groceries, utilities, and other living costs. Democrats have criticized President Trump over affordability as Republicans struggle to protect their slim House majority in a midterm election year.
How much could your tax refund increase in 2026?
The Tax Foundation’s analysis found that the average tax refund in 2026 could be $300 to $1,000 higher than in previous years, based on historical IRS data and private sector estimates, said Garrett Watson, director of policy analysis at the tax foundation.
“But there’s a very important caveat here,” Watson told CNBC. “This is about the average. It masks a lot of variation among taxpayers.”
For example, he said, filers with large tips or overtime income, or certain high-income earners, are likely to receive a “much larger refund” compared to lower- to middle-class W-2 workers who receive only a “modest increase” from the larger standard deduction.
The standard deduction for 2025 increased from $15,000 and $30,000, respectively, to $15,750 for single filers and $31,500 for married couples filing jointly.
By comparison, certain workers can deduct up to $25,000 in tip income and $12,500 in overtime pay in 2025.
Meanwhile, the state and local tax credit (SALT) limit was raised from $10,000 to $40,000 in 2025. SALT deductions include state and local income and property taxes. Most filers don’t qualify because they have to itemize their deductions to get the benefit.
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Another report released this week by the American Enterprise Institute predicts that about 60% of filers will receive an average tax reduction of nearly $1,200 on their 2025 returns. This number refers to the 2025 tax reduction, not the filer’s refund.
Authors Kyle Pomerleau and Hua-kun Li write that the share of filers who benefit and the average tax reduction increase with income, with middle- and high-income filers “likely to receive larger tax breaks” under the proposed structure.
But how the tax cuts ultimately translate into refunds will largely depend on “the personal characteristics of the taxpayers” and whether they adjusted their payroll withholdings after President Trump’s law took effect, the researchers wrote.
