Why Bigger Tax Refunds May Be Coming In 2026

The One Big Beautiful Bill Act (OBBBA) will give most Americans substantial tax refunds in 2026, according to Trump administration officials, tax analysts, and at least one high-ranking Republican congressional leader. Per an analysis of IRS data from CBS News, these new tax rules could mean that the typical refund will increase by about $1,000 in 2026 — to roughly $4,151 for each filing household. Most of these refunds will be based on new provisions from the OBBBA such as new senior tax deductions for some retirees, and an increase in the State and Local Tax (SALT) deduction (to $40,000). Plus, a new deduction on automobile loan interest (up to $10,000) could be a relief for the alarming number of Americans who now pay more than $1,000 a month on car payments. The OBBBA also created a deduction for overtime, up of $12,500 a year. There's even a new tax law that could change restaurant tipping forever in the U.S. that will allow tipped workers to deduct up to $25,000 for tips.

According to U.S. Representative Jason Smith, chairman of the Ways and Means Committee, other OBBBA provisions could similarly help working families. These include increasing the child tax credit to $2,200 (and indexing it to inflation), creating a permanent paid leave tax credit, and the launch of the $1,000 Trump accounts for every newborn child.

Don Schneider, a former economist for the U.S. House of Representatives' Ways and Means committee and current deputy head of U.S. policy for investment bank and financial services company Piper Sandler, told the S-Corp Talking Taxes in a Truck podcast that some Americans will be "surprised by the really, really large refunds... In a typical year, we might have about $270 billion in tax refunds, and it will be that plus another $90 billion."

However, some taxpayers can expect to receive larger refunds than others. "If your income is based largely on overtime or tips, then you could be paying much less income tax than your coworker who is a salaried employee even if you earn roughly the same amount," Adam Brewer, a tax attorney affiliated with AB Tax Law told The Hill.

Indeed, according to a June 2025 Congressional Budget Office (CBO) report, the amount of resources granted to Americans from OBBBA tax breaks between 2026 and 2034 won't be evenly distributed among households. In fact, the wealthiest 10% of Americans will receive $12,000 more each year, while middle-income households may see their resources only go up by between $500 to $1,000 annually. Meanwhile, those in the bottom 10% of income will see their resources drop by $1,600 a year due to cuts in programs such as Medicaid, and the Supplemental Nutritional Assistance Program (SNAP), according to a Congressional Budget Office report.