The Trump administration predicts that tax refunds issued in 2026 will be the largest in U.S. history. A recent White House statement projected that average refunds will increase by $1,000 or more due to policies enacted under President Trump’s Working Families Tax Cuts Act.
The White House cited analysis from the Tax Foundation showing average refunds of $3,004 in 2023 and $3052 in 2024. The predicted average refund for tax year 2025 rose to $3,800.
According to the Tax Foundation, refunds issued in 2026 will increase due to provisions of the One Big Beautiful Bill Act (OBBA), which cut taxes for the year 2025. The Tax Foundation estimated last year’s overall reductions in individual taxes at $129 billion, with $100 billion of those savings realized as higher refunds when individuals file their 2026 returns.
The Internal Revenue Service (IRS) tax withholding policies did not adjust for the year 2025 and will not reflect the new policies and provisions of the OBBA until 2026. The result is that most workers’ take-home pay had not yet been adjusted to reflect the new tax provisions, leading to higher withholding than required throughout 2025. The refunds issued in 2026 will adjust for the higher tax withholdings and savings will be reflected in the amount returned. The Joint Committee on Taxation (JCT) estimates that an additional $30 billion will remain in the paychecks of American taxpayers once withholding guidance is updated in 2026.
The Tax Foundation outlined seven major tax cuts in the OBBA, including increases to the maximum child tax credit, the standard deduction for both joint and single filers, and the state and local tax (SALT) deduction. In addition, the bill provided additional deductions for seniors, higher deductions on auto loan interest, and increased deductions for tips and overtime income.
