MW Your tax refund could be $1,000 bigger next year - and even more if you make these money moves in time
Andrew Keshner
These larger tax refunds would come at a time when many Americans are feeling cost-conscious and priced-out
Americans' tax refunds will likely be bigger, on average, next year. And there's still time to make the payout even bigger by making some money moves.
The single biggest check many Americans receive in a year is poised to get noticeably bigger in 2026.
Federal income-tax refunds next year are set to climb - by hundreds of dollars individually and billions of dollars in aggregate - due to President Donald Trump's tax law, according to economists and tax experts.
Projections vary, but they are generally pointing upward at a time when many households are feeling cost-conscious, cash-strapped and priced-out. An extra cash infusion may also offer some reassurance when the job market appears stuck.
See: Jobless claims sink to three-year low in no-hire, no-fire U.S. economy
Consider the estimates.
Refunds could climb an extra $675 on average, according to an analyst note from Principal Asset Management last month. That would raise the typical refund to almost $3,800 per filer, an analyst said.
Intuit's $(INTU)$ TurboTax estimates that taxpayers could receive up to $1,000 more per refund next year, according to Lisa Greene-Lewis, a certified public accountant and tax expert at the company. This year, refunds for TurboTax customers averaged more than $3,000, in line with Internal Revenue Service historical averages, she said.
Nearly half of people surveyed last year said they would use their refund money to cover bills. Greene-Lewis is expecting even more people to use refunds on necessities in 2026.
Meanwhile, Piper Sandler analysts say taxpayers collectively will receive around $91 billion in additional refunds on their 2025 taxes. That could pencil out to roughly $1,000 more per refund, though payments could be "substantially more for some filers." The projection comes in a note titled "The Biggest Tax Refund Season Yet?"
For context, the average 2024 refund from the IRS was $3,052, according to mid-October statistics. The tax collector has distributed a combined $311.6 billion in refunds on 2024 returns, issuing them for almost two-thirds of returns so far.
A refund is the IRS's return of money that a taxpayer has overpaid to the government throughout the year, based on a tax bill that's also been lowered by deductions and credits. The 2026 refund projections underscore the array of new and enhanced tax breaks within the One Big Beautiful Bill Act, such as "no tax on tips" and a new "senior bonus."
Many of those breaks were designed to be retroactive and to apply to 2025 tax returns.
Even for taxpayers who aren't claiming the new breaks, widely used provisions like the standard deduction and the child tax credit are getting bigger. The larger standard deduction contributes $116 of the estimated $675 increase in refund money, according to Principal Asset Management.
In theory, people who anticipate lower tax liabilities could decrease how much of their paycheck goes to the IRS throughout the year. Making that change would result in bigger paychecks and a smaller refund. But few people fiddle with tax withholding levels once they're set. That's unlikely to change this year, payroll-tax experts told MarketWatch.
Thus the potential rise in 2026 refunds.
The perennial criticism of people who celebrate their tax refund is that the money amounts to a no-interest loan they've been making to the U.S. government. Love them or hate them, refunds have big-picture impacts. One clear impact is on consumer debt and credit - an area on which some investors have been keeping a close eye.
As consumers shop for holiday presents, credit-card balances typically crest in the fourth quarter. In the first quarter, balances typically decline. Refunds help fuel that paydown.
Americans held $1.21 trillion in credit-card debt during last year's fourth quarter, according to the Federal Reserve Bank of New York. The balance eased to $1.18 trillion in the first quarter of this year. People had $1.23 trillion in credit-card debt during the third quarter, a nominal record, New York Fed data show.
For over a year, credit-card and car-loan delinquency rates have hovered at levels last seen in 2011, in the wake of the "Great Recession."
A tax refund's role in helping people repay debts "might be even more important in this go-round," said Matthew Martin, senior U.S. economist at Oxford Economics.
The IRS will pay up to $50 billion more in refunds during the upcoming tax season, according to Oxford Economics projections. That could be an average increase of $300 per refund in a pool of more than 160 million tax returns, Martin said.
Beyond household debt, higher refunds could put disposable income in taxpayer pockets to stoke consumer spending, and in turn maintain the jobs that serve that demand, Martin said, characterizing refund money as "another support for the labor market."
The labor market has been stuck in a low-hire, low-fire holding pattern for some time. The Federal Reserve is watching closely as it determines the coming moves for its benchmark interest rate.
"If the labor market is weakening, households are more dependent on the entirety of their refund to get them over the hump and allow them to continue their spending patterns," Martin said.
To be sure, there's a limit on the macroeconomic effect of higher refunds, Martin noted.
Much of the extra refund money next year will go to upper-income households, he said. That's largely due to a temporarily higher $40,000 deduction on state and local taxes, he said. That so-called SALT break mostly benefits wealthier homeowners in high-tax states.
These households may not quickly flush the money back into the consumer economy, he said. Surveys indicate higher-income households are more inclined to save or invest their refund checks instead of immediately spending the money.
"There's plenty of other forces working in either direction" to slow or speed the economy, Martin said - but higher tax refunds at this moment certainly don't hurt. "In isolation, I think it's a benefit to the overall economy."
There's still time to for you to ramp up your refund
Two-thirds of people said they plan to start their 2025 tax planning next year, according to a TurboTax survey. That's too late, Greene-Lewis said. Considering the importance of securing a large refund, year-end planning can pay off, she said.
For example, workers with tips and overtime compensation should track the income they are receiving that can count toward new deductions. Homeowners have their own ways to get the most from the SALT deduction.
Retirement savers can decrease their taxable income by putting more money into 401(k)s through the end of the year. Their 2025 IRA contributions through April 15 of next year might be tax deductible, too.
Time is of the essence when it comes to making these refund-enhancing tax-planning moves, and filing your 2025 tax return, according to Greene-Lewis. "The sooner you get it, the sooner you can pay down debts incurred."
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-Andrew Keshner
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December 04, 2025 11:52 ET (16:52 GMT)
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