Will 2026 Tax Returns Be Bigger? Not for everyone.

Tax refunds should be big this year, but many Americans may find theirs isn’t one of them, some analysts say.

At the start of tax season, the White House said 2026 would see “the biggest tax refund season ever,” with the average refund expected to increase by $1,000 or more thanks to President Donald Trump’s signature tax and spending bill passed last summer. The refunds were supposed to get an increase in standard deductions and new provisions such as no tax on tips, overtime and interest on certain car loans and a new deduction for seniors.

Tax season is not over yet so refund rates may increase but so far, the average tax refund has been much smaller than predicted. As of the week ending March 20, the average tax return was up 10.9%, or just a few hundred dollars, to $3,571 from $3,221 from the same time last year, IRS data show.

“If you’re wondering why your tax return is so low, you’re not alone,” according to H&R Block’s tax blog. “Many taxpayers who file their tax returns are wondering the same thing.”

Why Are Tax Returns Not as Big as Predicted?

Explanations vary, but H&R Block suggests that other reasons for lower-than-expected returns could be:

• Gig workers who didn’t realize they owed limited taxes on that income missed those payments or had to pay penalties for underpayment of taxes.
• Not completing a W-4 and calculating withholding for every job you worked or received a raise without increasing the withholding. Some of these can mean a lack of holdings that can reduce returns.
• Eligibility changes for tax credits and deductions can limit the size of the refund. For example, if your child turns 17 before the end of the year, your child credit may be a smaller dependent credit of $500 rather than a $2,000 child tax credit.
• Garnishing unpaid debts such as child support.

Benefits of Unequal Tax Law?

Another reason why many Americans are not seeing the tax refunds that many had predicted is that they are more concentrated in select groups of filers, wrote Corey Husak, director of tax policy at the Center for American Progress, in a report earlier this year.

Less than half (48.8%) of American households making less than $100,000 will receive an additional refund this year, while nearly all Americans (93.1%) earning more than $100,000 will receive an additional refund, he estimated.

However, the disparity in refund dollars is partly due to how taxes are paid, too, said Eric Steffy, senior federal benefits specialist and chief executive officer of Federal Solutions Support.

“It’s true that high earners tend to see the biggest tax savings in dollar terms, but that’s because they pay more to begin with,” Steffy said. “Our tax system is designed so that low-income households have a low tax rate, usually 12%, while high-income earners are taxed much higher, sometimes 32% or more.”

Who Will Get the Biggest Returns?

A large tax refund “depends a lot on whether the taxpayer is part of a group that favors a tax cut under the law,” Husak said.

Most (55%) of the tax refunds, he said, will go to just these two groups of people: those who earn eligible overtime pay or those who pay a lot of state and local taxes, he said.

By 2025, SALT (state and local tax) increased to $40,000 from $10,000. To claim SALT, your total deductions must exceed your standard deduction. Previously, “the super-wealthy had no tax benefit since their SALT total was $10,000 and they didn’t get the child tax credit because of the income deduction,” says Richard Pon, a San Francisco certified public accountant.

Anyone who works overtime can deduct up to $12,500 of overtime for a single filer or $25,000 for joint filers. The deduction kicks in if your adjusted gross income is more than $150,000 for single filers or $300,000 for married couples filing jointly, and you may have to calculate the amount yourself this year.

But that doesn’t mean millions of Americans aren’t benefiting from the new tax laws, Steffy said.

“Because taxpayers have been told to expect a big refund, there will be a big cut if that refund comes back only a few hundred compared to last year’s refund,” he said. “That’s because for some taxpayers the tax break was seen as a higher take-home pay as less taxes were deducted from their regular paycheck during the year. When the tax withholding goes down, the tax break is increasingly seen as an extra payment in the paycheck instead of a final tax-time refund.”

So a smaller-than-expected tax refund could be “that the tax exemption is increasingly being brought forward, turning what was a nice refund check into a steady increase in take-home pay,” he said.

Medora Lee is a money, markets, and personal finance reporter for USA TODAY. You can find him at [email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.

This article first appeared on USA TODAY: Will the 2026 tax refund be big? Not for everyone.

Reported by Medora Lee, USA TODAY / USA TODAY

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