2026 is just around the corner, and so are taxes. The IRS has announced larger refunds for next year, a move that could benefit millions of Americans. In each of the last two tax years, more than 100 million taxpayers received refunds averaging around $3,000, totaling more than $300 billion each year. However, it’s important to keep in mind that the impact of the increased refunds varies depending on each taxpayer’s personal and employment circumstances.
Why tax refunds could be higher in 2026
To provide some context, the IRS has updated deductions and tax credits, which benefits certain groups. For example, families with children qualify for dependent tax credits; taxpayers claiming the standard deduction, which has been adjusted to reflect inflation; and individuals whose income falls into new tax brackets, who could now pay less tax and receive a larger refund. Therefore, it’s important to be informed and understand your family’s specific situation to determine the refund they are entitled to. These changes, effective for 2026, are a consequence of the Big Beautiful Bill Act (OBBBA), which reduced individual income taxes by approximately $144 billion for 2025.
How withholding rules may boost refunds at tax time
In any case, it’s important to note that the Internal Revenue Service (IRS) did not adjust the withholding tax tables after the law’s passage. As a result, employers continued to withhold more taxes from employees’ wages than the new law required, according to the Tax Foundation. For those looking to maximize their 2026 refund, it’s advisable to review the tax changes in advance and plan their tax return strategically. Gathering information and ensuring all documents are in order is crucial to avoid getting lost in the bureaucracy.
It is important for taxpayers seeking refunds to verify available deductions and credits, ensuring all income and expenses are recorded correctly. They should also consider adjusting their tax withholding throughout the year to optimize cash flow. According to local media, “Private sector economic analyses suggest that the OBBBA will generate up to $100 billion in additional refunds in 2026, with average refunds between $300 and $1,000 higher than in a typical year,” adds the Tax Foundation.
Who stands to benefit the most from the 2026 tax changes
The fact is that one consequence of the change is that instead of gradually receiving the benefit of tax reductions through higher net pay throughout the year, most taxpayers will receive the entire amount at once when they file their returns in the form of a refund after the annual tax filing with the IRS. Therefore, the 2026 tax season is shaping up to be an opportunity to receive larger refunds thanks to inflation adjustments and updates to deductions and tax credits. Most importantly, the refund amount will vary significantly depending on each taxpayer’s individual circumstances.
According to the Tax Foundation’s tax calculator, “Seniors will benefit from the new $6,000 deduction, and taxpayers with dependent children will benefit from the larger child tax credit. Workers who receive tips or overtime pay could see larger refunds thanks to deductions for these types of income.” Therefore, it’s very important to plan ahead and stay informed, as this can make a difference in the final refund amount and offer significant financial relief for families.