Americans may get bigger tax refunds next year, economic study finds

Many Americans Expected to See Larger Tax Refunds in 2026

According to an analysis from Oxford Economics, many Americans could be in for heftier tax refunds next year when they file their 2025 tax returns. This is largely due to new provisions enacted through the Republicans’ “one big, beautiful bill” act that are retroactive to the start of the current year.

The analysis suggests that total taxpayer savings could amount to an additional $50 billion through bigger tax refunds or a cut in their 2026 taxes. This would represent an 18% increase from the $275 billion in refunds issued by the IRS this year to nearly 94 million taxpayers who overpaid on their 2024 federal tax returns.

The “big, beautiful bill,” signed into law by President Trump in July, extended the tax reductions enacted under the 2017 Tax Cuts and Jobs Act. It also introduced new breaks such as eliminating taxes on some overtime and tipped income, as well as raising the cap on the deduction for state and local taxes (SALT) from $10,000 to $40,000.

While the tax changes are effective this year, the IRS has not yet updated its withholding tables, which provide guidance to employers on federal tax withholding from employees’ paychecks. As a result, many taxpayers may have overpaid on their taxes this year, leading to larger refunds or smaller tax bills next year.

It is expected that a disproportionate share of the benefits from the new tax law will accrue to upper-income households. Wealthy households, in particular, are likely to benefit from the higher SALT cap, which can only be accessed by tax filers who itemize their deductions.

Seniors are also expected to benefit from the new $6,000 deduction for individuals over 65 years old, providing as much as $9.3 billion in tax savings, according to the Oxford analysis.