During a recent press briefing, White House Press Secretary Karoline Leavitt revealed that millions of Americans may receive significantly higher tax refunds next spring. Her comments arrive as experts forecast what could become a record-breaking tax season, raising public interest about how these changes might affect individual finances.
Why Tax Refunds Could Increase Dramatically
Financial Firms Predict Major Boost
The new projections are based on an analysis conducted by Piper Sandler, a leading investment banking firm. According to its research:
- The average taxpayer may collect nearly $1,000 more in their 2026 federal tax refund.
- Overall, nationwide refunds could rise by more than $91 billion.
These estimates suggest one of the largest refund increases in U.S. history.
Impact of the “One Big Beautiful Bill Act”
New Tax Code Rules Introduced
The One Big Beautiful Bill Act (OBBBA)—signed by President Donald Trump in July—plays a central role in these projections. The legislation introduces sweeping adjustments to the federal tax code, including:
- A higher standard deduction
- New tax exemptions
- Updated rules for tips, overtime pay, car loan interest, and other income types
These broad changes were heavily debated before approval and are expected to reshape the tax burden for millions.
Retroactive Changes Could Boost 2026 Refunds
Many of the tax code revisions under OBBBA are retroactive to January 2025. This means income earned throughout 2025 will be recalculated under the new system when individuals file in 2026.
What Retroactive Changes Mean for Taxpayers
Because taxes withheld in 2025 were calculated using the old tax rules, many workers may end up overpaying throughout the year. When they file in 2026, the IRS will compare the amount withheld with the reduced tax liability based on the new law—creating a refund gap in favor of taxpayers.
This dynamic is a key reason why experts believe refunds will soar.
IRS Will Not Update Withholding Tables for 2025
In August, the IRS announced that it will not modify tax forms or withholding tables for the 2025 tax year. These tables guide employers in determining how much federal tax to deduct from each paycheck.
Why This Matters
Without updates, employers will continue withholding tax as if the old rules still apply. Piper Sandler economist Don Schneider, speaking on the podcast Talking Taxes In a Truck, said this disconnect will likely lead to taxpayers being under-withheld, resulting in massive refunds during the 2026 filing season.
Schneider noted,
“When people finally file, they’re going to be surprised by some really, really big refunds.”
Are Bigger Refunds Guaranteed?
A separate analysis from J.P. Morgan echoes Piper Sandler’s forecast. Their report concludes that “too much money will have been withheld” and taxpayers should see larger refunds in early 2026.
Refund or Lower Tax Bill?
Even with strong evidence, Schneider cautions that taxpayers may not receive the full benefit as a refund. Some may instead experience:
- A lower tax bill rather than a large refund
- A mix of reduced tax liability and a moderate refund
He summarizes the situation clearly:
“This could be one of the largest refund seasons ever. But the question remains—will Americans get the full benefit as a refund, or will it simply reduce what they owe?”
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Conclusion
The upcoming 2026 tax season is shaping up to be one of the most significant in U.S. history. With the One Big Beautiful Bill Act, retroactive tax adjustments, and unchanged IRS withholding tables, many Americans are set to receive substantial tax refunds—potentially up to $1,000 more. While economists generally agree on the direction of these changes, the exact benefit taxpayers receive—whether through a larger refund or lower liability—will become clear only when filing season arrives. Regardless, the new tax rules promise to reshape how millions experience the federal tax system next year.
FAQs
1. Why might tax refunds increase in 2026?
Refunds may rise due to retroactive tax cuts under OBBBA and outdated withholding tables causing overpayment throughout 2025.
2. Will all taxpayers receive a $1,000 larger refund?
Not exactly. The $1,000 figure is an average estimate—actual refund amounts will vary based on income and withholding.
3. Does the IRS plan to update withholding tables for 2025?
No. The IRS confirmed it will not update 2025 withholding tables, increasing the likelihood of higher refunds in 2026.