Your tax refund could be $1,000 higher in 2026. Here’s why.

Federal tax refunds are always eagerly awaited by many families, as they often represent the largest check they receive each year. And next year, taxpayers can expect an even bigger refund, with the average payment set to increase by around $1,000 per filer, according to a recent analysis by financial services company Piper Sandler.

Based on IRS data from the 2025 tax filing season, which showed an average tax refund of $3,151, the typical refund check for 2026 is estimated to be approximately $4,151 per filer. Taxpayers can expect to file their 2025 individual returns in early 2026, with most refunds being issued within 21 days of submission to the tax agency.

This projected increase in tax refunds aligns with other forecasts that predict a bumper year for refunds, driven by the “one big, beautiful” tax and spending law signed by President Trump in July. The new legislation introduced a range of tax breaks retroactive to 2025, including exemptions for some overtime and tipped income, as well as raising the deduction cap for state and local taxes (SALT) from $10,000 to $40,000.

“When people file their taxes, they will be pleasantly surprised by significantly larger refunds,” said Don Schneider, deputy head of U.S. policy at Piper Sandler. “In a typical year, we might see around $270 billion in tax refunds, but this year it could be that amount plus an additional $90 billion.”

Despite the new tax law’s retroactive cuts, many Americans are not adjusting their withholding amounts due to the difficulty in estimating the impact. As a result, the average refund per filer could be approximately $1,000 higher than usual, representing a one-third increase compared to previous years.

“This upcoming tax season could potentially be one of the largest in terms of refunds,” added Schneider.

However, the benefits of the increased refunds are expected to be skewed towards middle- and upper-middle-income households, with those earning between $60,000 to $400,000 per year likely to benefit the most. Higher-income individuals are projected to receive a larger share of the new tax breaks compared to lower-income households.

While some of the benefits of the new tax law may not reach the highest-earning households due to income phase-outs, lower-income households may also see limited benefits. For example, the higher SALT deduction cap only benefits those whose state and local taxes exceed the 2025 standard deduction, which may exclude lower-income households who do not itemize their deductions.

Overall, the new tax law is expected to have a significant impact on tax refunds, with middle- and upper-income households likely to see the largest benefits. As taxpayers prepare to file their 2025 returns in early 2026, the prospect of larger refunds is generating anticipation among many Americans.