Why Bigger Tax Refunds In 2026 Could Ultimately Cost Americans

Big tax refunds could be coming for most Americans in 2026 thanks to the One Big Beautiful Bill Act (OBBBA) pushed by President Donald Trump. But while the nonprofit Tax Foundation believes the OBBBA will increase income tax refunds by an average of around $1,000, the think tank's president and CEO, Daniel Bunn, warned in a Fortune column that those same tax cuts could result in a deficit that could grow by at least $3 trillion by the end of 2034 — and that might be a conservative estimate. The Congressional Budget Office (CBO) estimated that the OBBBA's tax cuts will increase the deficit by $4.1 trillion by 2034, while temporary tax provisions like the Big Beautiful Bill's senior tax deduction could increase that growth to as much as $5.1 trillion if made permanent.

Accumulative budget deficits over the years have helped swell the national debt to more than $38.43 trillion as of January 2026, per Congress' Joint Economic Committee. Various economic institutions report that growing national debt could lead to the devaluation of the U.S. dollar, higher inflation, and a risk to national security. Yet, Dunn also cautions that the more immediate consequence of these refunds and new tax breaks could be cuts to institutions such as Social Security and Medicare in as little as seven years.

According to the Committee for a Responsible Federal Budget, the OBBBA's tax cuts will lead to the insolvency of the Social Security Trust Fund by 2032 — a development that could necessitate a cut of 24% for all Social Security benefits and an 11% cut to Medicare's Hospital Insurance fund.

But some people are already feeling the effects of the OBBBA in similar ways. To partially pay for tax cuts and refunds, the OBBBA slashes about $1 trillion from medical programs, including Medicare and Medicaid, according to the Center for Medicare Advocacy. Among the worst budget cuts to Medicare are a ban on enhancing Medicare Savings Programs designed to help pay for low-income seniors' premiums and medical bills and the fact that the OBBBA forbids most immigrants without green cards from receiving Medicare.

In addition, the OBBBA ends enhanced tax credits and other funding for the Affordable Care Act (ACA), which KKF estimated caused out-of-pocket premiums to skyrocket for enrollees by an average of 114% between 2025 and 2026. The OBBBA will also end efforts to expand funding to Medicaid and instead impose new work requirements, cap unsubsidized federal student loans for medical students and other professionals, and restrict or eliminate ACA tax credits for non-citizens. Additionally, the OBBBA is slated to reduce funding for the Supplemental Nutrition Assistance Program (SNAP) for low-income families by hundreds of billions of dollars over 10 years.