Tax refunds may be getting bigger in 2026, according to new research
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There’s something quietly reassuring about an unexpected bit of good news—especially when it comes from a place few people enjoy dealing with.
As the year winds down, Americans are watching their budgets closely, balancing everyday costs against the uncertainty of what comes next.
But sometimes, the system has a way of sending a pleasant surprise back your way, even when you least expect it. What’s coming for millions of taxpayers next year could be one of those rare moments when a little patience truly pays off.
Many Americans may receive larger tax refunds next year when they file their 2025 tax returns, according to a new analysis from Oxford Economics.
The report attributes the expected increase to provisions in the Republicans’ “one big, beautiful bill,” which was signed into law by former President Trump in July and applies retroactively to this year’s income.
The legislation extends the 2017 Tax Cuts and Jobs Act while introducing new benefits like eliminating federal taxes on certain overtime and tipped wages.
It also raises the deduction cap for state and local taxes, known as SALT, from $10,000 to $40,000—an adjustment expected to significantly favor higher-income households.
Oxford Economics’ lead economist Nancy Vanden Houten estimates that these changes could lead to an additional $50 billion in total taxpayer savings, representing about an 18% increase over the $275 billion in refunds distributed this year.
“Many taxpayers will pay too much in tax this year and see larger tax refunds or smaller tax bills next year than otherwise would be the case,” Vanden Houten wrote in the report.
Because the IRS hasn’t yet updated its withholding tables, many Americans are still overpaying throughout 2025 without realizing it.
When they file next spring, that extra money will come back to them in the form of larger refunds or reduced balances owed.
Also read: Could your SNAP benefits be delayed this fall? Here’s what’s happening
While refunds may rise across the board, wealthier households are positioned to benefit most from the new tax structure.
According to Oxford’s analysis, a disproportionate share of the savings will go to upper-income taxpayers, echoing findings from the Tax Policy Center.
That group estimated that roughly $6 of every $10 in new tax breaks will go to the top 20% of earners—those making more than $217,000 per year.
Much of this advantage comes from the expanded SALT deduction, which primarily benefits taxpayers who itemize rather than take the standard deduction.
Also read: Are you eligible for December’s $350 energy credit? Here’s how to find out
Seniors, however, will also enjoy a notable boost thanks to a new $6,000 deduction for Americans over 65, which could deliver about $9.3 billion in total tax savings, Oxford found.
This addition may offer relief for retirees managing fixed incomes while facing rising costs in essentials like housing and medical care.
Although many people associate tax refunds with “free money,” economists note that refunds are simply the return of overpaid taxes during the year.
Still, for households facing tight budgets, a larger refund in 2026 could provide a timely cushion for debt payments or emergency savings.
Read next:
Would you rather receive a larger paycheck every month or wait for a bigger refund next year? Share your thoughts below—how do you plan to make the most of your tax season windfall?
As the year winds down, Americans are watching their budgets closely, balancing everyday costs against the uncertainty of what comes next.
But sometimes, the system has a way of sending a pleasant surprise back your way, even when you least expect it. What’s coming for millions of taxpayers next year could be one of those rare moments when a little patience truly pays off.
Many Americans may receive larger tax refunds next year when they file their 2025 tax returns, according to a new analysis from Oxford Economics.
The report attributes the expected increase to provisions in the Republicans’ “one big, beautiful bill,” which was signed into law by former President Trump in July and applies retroactively to this year’s income.
The legislation extends the 2017 Tax Cuts and Jobs Act while introducing new benefits like eliminating federal taxes on certain overtime and tipped wages.
It also raises the deduction cap for state and local taxes, known as SALT, from $10,000 to $40,000—an adjustment expected to significantly favor higher-income households.
Tax refunds may be getting bigger in 2026, according to new research. Image source: Jakub Żerdzicki / Unsplash
Oxford Economics’ lead economist Nancy Vanden Houten estimates that these changes could lead to an additional $50 billion in total taxpayer savings, representing about an 18% increase over the $275 billion in refunds distributed this year.
“Many taxpayers will pay too much in tax this year and see larger tax refunds or smaller tax bills next year than otherwise would be the case,” Vanden Houten wrote in the report.
Because the IRS hasn’t yet updated its withholding tables, many Americans are still overpaying throughout 2025 without realizing it.
When they file next spring, that extra money will come back to them in the form of larger refunds or reduced balances owed.
Also read: Could your SNAP benefits be delayed this fall? Here’s what’s happening
While refunds may rise across the board, wealthier households are positioned to benefit most from the new tax structure.
According to Oxford’s analysis, a disproportionate share of the savings will go to upper-income taxpayers, echoing findings from the Tax Policy Center.
That group estimated that roughly $6 of every $10 in new tax breaks will go to the top 20% of earners—those making more than $217,000 per year.
Much of this advantage comes from the expanded SALT deduction, which primarily benefits taxpayers who itemize rather than take the standard deduction.
Also read: Are you eligible for December’s $350 energy credit? Here’s how to find out
Seniors, however, will also enjoy a notable boost thanks to a new $6,000 deduction for Americans over 65, which could deliver about $9.3 billion in total tax savings, Oxford found.
This addition may offer relief for retirees managing fixed incomes while facing rising costs in essentials like housing and medical care.
Although many people associate tax refunds with “free money,” economists note that refunds are simply the return of overpaid taxes during the year.
Still, for households facing tight budgets, a larger refund in 2026 could provide a timely cushion for debt payments or emergency savings.
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