\n<\/p>\n
Enacted in July, Trump\u2019s multitrillion-dollar legislation included several retroactive tax changes for 2025 that affect returns filed in 2026.\u00a0\u00a0<\/p>\n
However, the IRS\u00a0didn\u2019t update withholding tables<\/a> for employers, which dictate how much to take from workers\u2019 paychecks. As a result, 2025 employee withholdings were based on taxes owed before Trump\u2019s cuts. <\/p>\n \u201cWe expect that\u2019s going to pretty dramatically increase refunds on average during the [2026] tax filing season compared to prior years,\u201d said Garrett Watson, director of policy analysis at the Tax Foundation, a nonprofit think tank. <\/p>\n As of Dec. 26, the average refund<\/a> for individual returns was $3,167 during the 2025 filing season, up slightly from $3,138 in 2024, according to the latest IRS data.<\/p>\n<\/div>\n Millions of Americans could see a bigger refund or smaller tax bill in 2026, and a few tax breaks will impact a \u201csignificant portion\u201d of filers, according to Andrew Lautz, director of tax policy for the Bipartisan Policy Center, a nonprofit think tank.<\/p>\n For 2025, Trump\u2019s legislation increased the standard deduction<\/a> to $15,750 for single filers and $31,500 for married couples filing jointly, which impacts most filers.\u00a0That\u2019s up from $15,000 and $30,000, respectively, before the change. <\/p>\n Many families could also see a higher child tax credit<\/a>. For 2025, the maximum tax break increased to $2,200 from $2,000 for families eligible to claim the full value.\u00a0\u00a0<\/p>\n The new $6,000 senior deduction<\/a> for individuals age 65 and up could also impact many older Americans from 2025 through 2028. The full deduction is available with up to $75,000 in modified adjusted gross income ($150,000 for married couples filing jointly).\u00a0\u00a0<\/p>\n<\/div>\n Trump\u2019s legislation also added temporary tax breaks for smaller groups of filers, which could provide \u201cmuch larger\u201d cuts, according to Lautz.<\/p>\n Some of these include deductions on tip and overtime income<\/a>, a tax break on auto loan interest<\/a>, and a higher limit for the deduction for state and local taxes<\/a>, known as SALT. <\/p>\n Approximately\u00a06 million\u00a0workers\u00a0report tipped wages<\/a>, according to IRS estimates. And nationally, about 6% of workers\u00a0reported overtime pay<\/a>\u00a0in 2024, according to the Peter G. Peterson Foundation, an economic organization. <\/p>\n \u201cWhere we\u2019ll see the biggest increases in refund size is actually from the higher SALT cap,\u201d Lautz said. <\/p>\n For 2025, the SALT deduction limit was raised to $40,000, up from $10,000 in 2024, which includes state and local income taxes and property taxes. But you can only claim the SALT deduction if you itemize tax breaks. Roughly 90% of filers<\/a>\u00a0don\u2019t itemize, according to the latest IRS data.<\/p>\n<\/div>\n<\/div>\n\nWho could see a bigger tax refund in 2026\u00a0<\/h2>\n
Larger tax cuts for fewer Americans <\/h2>\n
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