Larger tax refunds predicted for millions as new IRS rules come into effect
Here are the Americans who may be seeing a larger 2026 tax refund
- Americans are anticipated to receive larger tax refunds this year, with the Internal Revenue Service (IRS) beginning to accept 2025 federal tax returns.
- Refunds could increase by up to 30%, driven by changes introduced in the Big Beautiful Bill Act signed last summer, and President Donald Trump’s new tax bill.
- Significant new deductions include a $6,000 federal deduction for seniors aged 65 and over on Social Security income, and deductions for qualified overtime pay up to $12,500 and tips (up to $25,000).
- The cap on the state and local tax (SALT) deduction has been temporarily raised to $40,000, and the maximum child tax credit increased to $2,200 per child.
- A new type of retirement account, referred to as a Trump account, has been created, into which the government will contribute $1,000 for each child born between 2025 and 2028.