US taxpayers set to receive ‘largest tax refund’ in history

U.S. Taxpayers Poised for Historic Tax Refunds in 2026

In what senior U.S. officials and tax analysts are calling a record-breaking “tax refund season,” hundreds of billions of dollars are expected to flow back to American households this spring as millions file their 2025 tax returns in early 2026. The Internal Revenue Service (IRS) is projecting significantly higher refund amounts on average compared with prior years — in some estimates by as much as $1,000 or more per taxpayer.

The driving force is new tax legislation passed in 2025, mainly the One Big Beautiful Bill Act (OBBBA) — a sweeping tax and spending law enacted by the Republican-controlled U.S. Congress and signed by President Donald J. Trump. Officials from the White House and Treasury have called the upcoming filing season the largest tax refund season in U.S. history.

What Is Driving This Refund Boom?

At the center of the story is the One Big Beautiful Bill Act (OBBBA) — a major tax reform package that took effect in 2025 and has been built into the 2026 tax filing season.

Key Features of the OBBBA Tax Law

The OBBBA includes wide-ranging changes that reshape the tax code and create opportunities for larger refunds. Key provisions include:

Increased Standard Deduction and Lower Tax Rates: The bill permanently extends lower individual tax rates and increases the standard deduction, reducing taxable income for many households.

Expanded Exemptions and Credits: New provisions eliminate or reduce taxes on tips, overtime pay, and certain auto-loan interest, while increasing the Child Tax Credit and introducing new deductions for seniors.

Higher SALT Deduction Limits: The cap on state and local tax (SALT) deductions was raised significantly (up to $40,000 for certain taxpayers), increasing potential itemized deductions for many filers.

Other New Deductions: Additional temporary provisions include seniors’ deductions and tax credits that also reduce taxable income.

Because many of these measures are retroactive to income earned in 2025, taxpayers will be able to claim them when filing in 2026 — even though employers did not adjust payroll withholding to reflect these new benefits.

This combination — expanded deductions and unchanged withholding tables — means many taxpayers will have overpaid taxes during the year, resulting in larger refunds when they file.

Record Totals: How Big Are Refunds Expected to Be?

Estimates vary slightly by source, but most forecasts point to a historic surge in refund totals:

Federal Forecasts and Estimates

Average Refund Increase: Analysts predict the average refund could rise by roughly $1,000 compared with 2025 filings, potentially bringing the average U.S. refund to over $4,000 per filer.

Total Refund Volume: Projections from financial analysts and congressional tax committees estimate an additional $91 billion to $150 billion in refund payouts compared with prior years.

Record Refund Season: According to lawmakers, the filing season might see a total of around $370 billion in refunds, roughly 26% higher than the previous year.

These figures would make the 2026 tax refund season the largest in U.S. history by both total dollars returned and average refund per taxpayer.

Who Benefits the Most?
Middle-Class and Working Families

Treasury Secretary Scott Bessent and IRS leadership have publicly stated that the bulk of increased refund amounts will accrue to middle-class Americans, workers, and households with children.

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