Tax refund could jump by $1,000 next year, and here’s exactly what analysts say will happen to yours

Your tax refund could jump by roughly $1,000 next year, making 2026 potentially the largest refund season in nearly a decade. Financial analysts and tax experts are predicting this historic surge will stem from new tax breaks included in the One Big Beautiful Bill Act signed into law in July 2025. Here’s what you need to know about claiming your larger refund.

Why Your Tax Refund Is Getting Bigger in 2026

The substantial increase in tax refunds stems directly from retroactive provisions in the One Big Beautiful Bill Act. This legislation, signed by President Trump on July 4, 2025, includes multiple new tax breaks that apply to 2025 tax returns filed in early 2026. Unlike traditional policy changes that take effect prospectively, these retroactive measures create significant windfalls for filers.

Piper Sandler analysts estimate the impact will add approximately $91 billion in aggregate refunds above typical levels. Don Schneider, deputy head of U.S. policy at Piper Sandler, stated “In a typical year, we might have about $270 billion in tax refunds, and it’ll be that plus another $90 billion.” The company projects taxpayers collectively will receive average refunds around one-third larger than usual.

Key Tax Breaks Driving Higher Refunds in 2026

Several major provisions under the new law contribute to the bigger refund checks. The elimination of taxes on certain tips and overtime income directly reduces tax liability for eligible workers. However, the most impactful change involves the state and local tax (SALT) deduction, which increased from $10,000 to $40,000, though this benefit phasesout for higher earners above $500,000 in annual income.

Additionally, standard deductions have increased due to inflation adjustments. According to Principal Asset Management, the higher standard deduction alone contributes approximately $116 of the estimated $675 increase in refund money. The child tax credit and other widely-used provisions also expanded, benefiting middle-class households disproportionately.

Tax Provision	Change for 2026	Impact on Refunds
No Tax on Tips	First $600 per month exempt	Significant for service workers
SALT Deduction	Increased to $40,000	Major benefit for high-tax states
Standard Deduction	Inflation-adjusted increase	Adds ~$116 per filer average
Child Tax Credit	Expanded parameters	Increases eligible filer refunds

Who Benefits Most From Larger 2026 Refunds?

While all income categories stand to benefit, the distribution isn’t equal. Piper Sandler analysis shows most benefits target middle and upper-middle-income households earning between $60,000 to $400,000 annually. Higher-income Americans above $217,000 receive approximately $6 of every $10 in new tax breaks, according to a Tax Policy Center analysis from July 2025.

Lower-income households receive minimal benefit from the SALT deduction increase because they typically claim the standard deduction rather than itemizing. The highest earners face phase-out limitations preventing them from fully utilizing the expanded SALT cap. These dynamics create a “sweet spot” for middle-class and upper-middle-class filers who can capitalize on multiple provisions simultaneously.

Tax Refund Expert Projections and Market Commentary

MarketWatch and multiple financial institutions have published extensive analysis forecasting the refund surge. Principal Asset Management specifically estimates refunds could climb an extra $675 on average, raising typical refunds to nearly $3,800 per filer. Intuit’s TurboTax estimates customers could receive up to $1,000 more per refund next year, with company data showing 2025 averaging over $3,000.

“When people go to file, they’ll be surprised by really, really large refunds,” Don Schneider, deputy head of U.S. policy at Piper Sandler and one of the report’s authors, said in a recent podcast about the analysis. “It could be one of the largest tax refund seasons ever.”

— Don Schneider, Deputy Head of U.S. Policy, Piper Sandler

Oxford Economics projects the IRS will pay up to $50 billion more in refunds during the upcoming tax season, translating to an average increase of approximately $300 per refund across more than 160 million tax returns. Matthew Martin, senior U.S. economist at Oxford Economics, characterized the refund boost as “another support for the labor market” given consumer spending dynamics.

What Can You Do Now to Maximize Your 2026 Refund?

Tax experts emphasize immediate action matters significantly. TurboTax data shows two-thirds of people plan to start 2025 tax planning after filing year-end taxes, which is too late to capture maximum benefits. Workers receiving tips or overtime income should carefully track compensation eligible for the new exclusions. This documentation becomes critical when filing forms come tax time.

Homeowners should review state and local taxes to maximize the expanded SALT deduction benefits, particularly those in high-tax states like California, New York, and New Jersey. Retirement savers can decrease taxable income by maximizing 401(k) contributions through December 31, 2025. IRA contributions made by April 15, 2026, may also be tax deductible for the 2025 tax year, providing another avenue to boost refunds.

Timeline for Receiving 2026 Refunds

Americans will file their 2025 individual tax returns starting in early January 2026, with the IRS aiming to issue most refunds within 21 days of submission. However, processing times may vary based on return complexity and IRS capacity. The IRS released draft 2026 withholding tables on November 18, 2025, reflecting these substantial tax law changes.

Meanwhile, tax preparation software companies are preparing for a historically large volume. TurboTax and other providers expect 10-15% higher return complexity next year due to new provisions, which could affect processing times. Filing electronically and providing clear documentation of new deductions and credits will accelerate refund processing.