Your Tax Refund Might Be $1K Bigger Next Year

Tax season might feel a little more generous next year, with the average American's refund expected to jump by about $1,000, according to a new analysis from Piper Sandler. That would put the typical check from the IRS at around $4,151 for the 2026 filing season, per CBS News. The spike is tied to the major tax and spending law signed by President Trump in July, which introduced several retroactive tax breaks for the 2025 tax year, including eliminating taxes on some overtime and tipped income and raising the cap on state and local tax (SALT) deductions from $10,000 to $40,000.

Don Schneider of Piper Sandler expects Americans will be "surprised by really, really large refunds," about a third larger than normal. He predicts the total refunded amount will jump from the usual $270 billion to about $360 billion. Most Americans haven't adjusted their tax withholding to account for the new rules, meaning they'll see the impact all at once when they file in early 2026. The extra cash won't be spread evenly, however. Middle- and upper-middle-income households, those earning between $60,000 and $400,000, stand to gain the most. According to an earlier analysis from the Tax Policy Center, people earning over $217,000 will collect $6 out of every $10 from the new tax breaks.

Some benefits do phase out for the highest earners: the expanded SALT deduction, for instance, starts to shrink after $500,000 in income. Lower-income households, meanwhile, are unlikely to see much benefit from the SALT change, since it only applies to people whose state and local taxes are higher than the standard deduction, and who itemize their returns. "This isn't going to the very bottom of the distribution. It isn't going to the very top of the distribution either," Schneider says. Still, "it could be one of the largest tax refund seasons ever." (Those on IDR plans could be in for a rude awakening, however.)