What to Expect from IRS Refunds and Tax Changes in 2026

As we approach the 2026 tax filing season, many taxpayers are curious about potential changes and how these might affect their refunds. With the introduction of new tax policies, especially under the One Big Beautiful Bill Act (OBBBA), understanding what to expect can alleviate some stress.

Anticipated Increase in Tax Refunds

Why Refunds May Be Bigger

For the 2026 tax season, many taxpayers are likely to see larger refunds. This increase is primarily due to significant tax cuts introduced by the OBBBA for the 2025 calendar year. Since these cuts were not included in the previous withholding tables, many individuals overpaid taxes throughout the year, resulting in unexpectedly high refunds.

• Average Refund Size: As of early April, the average refund has climbed to $3,462, marking an 11.1% rise compared to the previous year.
• Over-Withholding: With adjustments in tax rates and deductions, many taxpayers unknowingly paid more than necessary during the year.

Total Refunds Issued

Comparing Past and Present Seasons

The total amount refunded by the IRS is also on the rise. By early April 2026, the IRS had already issued $241.7 billion in refunds, up from $211.1 billion in the same period the previous year. This trend points to more people receiving refunds early in the filing season.

• Refund Timing: Refunds typically peak after mid-February when the IRS releases returns involving Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC).

Number of Refunds Processed

More Filers Receiving Refunds

As of early April, nearly 70% of tax returns filed in 2026 had resulted in refunds, marking an increase from previous years. This percentage is expected to stabilize as more people file their returns closer to the deadline.

• Filing Statistics: In 2024 and 2025, the IRS issued over 103 million refunds annually, with this number projected to rise in 2026.

Impact of Legislative Changes

Long-Term Economic Effects

While the immediate impact of the OBBBA includes larger refunds, the long-term effects of these tax cuts are expected to stimulate economic growth. By permanently lowering marginal tax rates, this legislation aims to increase work incentives, fostering economic expansion over time.

• Work Incentives: The reduction in tax rates is designed to encourage productivity, which could benefit the economy at large.

Frequently asked questions

What is the One Big Beautiful Bill Act?

The OBBBA is a legislative act that introduced new tax cuts and adjustments, particularly impacting tax filings for the 2026 season. It includes various deductions and has led to larger refunds due to changes in withholding practices.

How can I ensure I get the maximum refund?

To maximize your refund, ensure that your withholdings are accurately adjusted to reflect the latest tax laws. Consider consulting a tax professional if you're uncertain about your withholding status.

Will these tax cuts affect me next year?

The tax cuts introduced by the OBBBA are expected to have a lasting impact, potentially affecting your tax situation in the coming years. Monitoring updates and consulting with tax experts can help you stay informed.

How does over-withholding occur?

Over-withholding happens when more taxes are taken out of your paycheck than necessary. This often results in a larger refund but also means you've given an interest-free loan to the government.

Can I change my withholding mid-year?

Yes, you can adjust your withholding at any time by submitting a new W-4 form to your employer. It's advisable to review your withholding regularly, especially after significant financial changes.

Definition

In summary: The 2026 tax season is marked by larger refunds due to over-withholding and legislative changes under the OBBBA. Taxpayers should adjust their withholdings to better align with the new tax laws and consider seeking professional advice to optimize their tax situation.

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