IRS Confirms Bigger Tax Refunds in 2026 – Most Americans Are Missing This

By Nitish kumar / February 1, 2026

Tax season 2026 is officially here, and if you are hearing nonstop talk about bigger refunds, you are not alone. Many taxpayers are confused, excited, or even suspicious. Are refunds really higher this year? Did the IRS change the rules again? And most importantly, should you be happy or worried?

This filing season is different from the last few years. You are reporting income earned in 2025, and the deadline to file is April 15, 2026. The IRS expects around 164 million tax returns, making this one of the busiest tax seasons ever.

What makes 2026 especially important is that this is the first full tax year where major provisions from the 2025 tax law changes are fully in effect. Some benefits apply automatically. Others require action from you. Knowing the difference can mean thousands of dollars more in your refund.

Why Everyone Is Talking About Bigger Tax Refunds in 2026

The U.S. Treasury has projected that the average tax refund could be about $1,000 higher than last year. In 2025, the average refund was around $3,100. For many filers in 2026, refunds may reach $4,000 or more.

This does not mean you earned more money.
It also does not mean the government suddenly became generous.

A larger refund usually means you overpaid your taxes during the year.

Most people did not update their tax withholding in 2025. Taxes were taken out of paychecks at the same rate as previous years. However, new deductions and lower effective tax rates reduced the actual tax owed. The IRS is now returning the difference.

You can review or update your withholding at the official IRS site:
https://www.irs.gov/payments/tax-withholding

Understanding the 2026 Standard Deduction Increase

The standard deduction increased significantly, affecting nearly 90 percent of taxpayers.

Single filers: $15,450
Married filing jointly: $31,500
Head of household: $23,625

This means more of your income is protected from federal taxes.

Example:
If you earned $60,000 as a single filer, only $44,550 is taxable after the standard deduction. Less taxable income means lower taxes and often a bigger refund.

Official IRS deduction details:
https://www.irs.gov/taxtopics/tc551

SALT Deduction Cap Increased to $40,000

For years, the State and Local Tax (SALT) deduction was capped at $10,000. This hit taxpayers hard in high-tax states like California, New York, New Jersey, and Connecticut.

For tax year 2025 (filed in 2026), the SALT cap increased to $40,000, remaining in place through 2029.

This change may make itemizing deductions more valuable than taking the standard deduction for many households.

Official IRS SALT guidance:
https://www.irs.gov/taxtopics/tc503

Child Tax Credit Updates for 2026 Filings

Families with children see meaningful improvements this year.

Up to $2,200 per child under age 17
Partially refundable even if you owe little or no tax
Can be combined with other credits like the Earned Income Tax Credit

While this credit may not change your life overnight, it helps offset rising costs such as childcare, food, and school supplies.

Official Child Tax Credit page:
https://www.irs.gov/credits-deductions/child-tax-credit

New Senior Bonus Deduction for Taxpayers 65+

Taxpayers age 65 or older may qualify for a new senior bonus deduction.

$6,000 extra for single seniors
$12,000 extra for married couples if both are 65+
Subject to income limits

This deduction can lower taxable income and reduce how much Social Security income is taxed.

Official IRS senior tax information:
https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-distributions

New Deductions for Tip Income and Overtime Pay

Workers who rely on tips or overtime may see additional tax relief.

Tip income deduction: Up to $25,000 for eligible single filers
Overtime deduction: Applies only to the premium portion of overtime pay

Accurate W-2 reporting is essential. Always confirm your employer properly reports tips and overtime.

Official IRS wage reporting rules:
https://www.irs.gov/forms-pubs/about-form-w-2

Filing Tips to Avoid Delays and Mistakes

File early to receive refunds faster
Use e-file and direct deposit for quicker processing
Paper checks are being phased out
IRS Direct File is not available this year
IRS Free File is available for incomes under $89,000

IRS Free File program:
https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free

Use Your Refund Wisely and Adjust Withholding

If you receive a large refund, consider:

Paying down debt
Building an emergency fund
Investing for long-term goals

Also consider adjusting withholding so you receive more money in each paycheck during the year.

Withholding estimator:
https://www.irs.gov/individuals/tax-withholding-estimator

Frequently Asked Questions (FAQ)

1. When is the 2026 tax filing deadline?

April 15, 2026.
https://www.irs.gov/filing

2. What income year am I reporting in 2026?

You report income earned in 2025.
https://www.irs.gov/individuals

3. Why is my tax refund bigger this year?

Lower taxes and higher deductions led to overpayment.
https://www.irs.gov/refunds

4. Does a bigger refund mean I earned more?

No, it usually means you overpaid taxes.
https://www.irs.gov/payments

5. What is the standard deduction for single filers?

$15,450 for 2025 income.
https://www.irs.gov/taxtopics/tc551

6. What is the SALT deduction cap for 2026 filing?

Up to $40,000.
https://www.irs.gov/taxtopics/tc503

7. Should I itemize deductions this year?

If SALT and other deductions exceed the standard deduction.
https://www.irs.gov/credits-deductions

8. How much is the Child Tax Credit?

Up to $2,200 per child.
https://www.irs.gov/credits-deductions/child-tax-credit

9. Is the Child Tax Credit refundable?

Partially refundable.
https://www.irs.gov/credits-deductions

10. Who qualifies for the senior bonus deduction?

Taxpayers age 65 or older with qualifying income.
https://www.irs.gov/retirement-plans

11. Can Social Security income be taxed less this year?

Yes, due to higher deductions.
https://www.irs.gov/benefits/social-security-benefits

12. Are tips deductible in 2026?

Yes, up to limits for eligible filers.
https://www.irs.gov/forms-pubs/about-form-w-2

13. Is overtime pay deductible?

Only the premium portion qualifies.
https://www.irs.gov/forms-pubs

14. Is IRS Direct File available?

No, not for this tax year.
https://www.irs.gov/filing

15. What is IRS Free File?

Free tax filing for incomes under $89,000.
https://www.irs.gov/freefile

16. How long does it take to get a refund?

Typically within 21 days for e-file.
https://www.irs.gov/refunds

17. Should I file early?

Yes, to avoid delays and fraud risks.
https://www.irs.gov/filing

18. How do I avoid IRS scams?

Only respond through official IRS channels.
https://www.irs.gov/newsroom/tax-scams-consumer-alerts

19. Can I adjust my tax withholding?

Yes, anytime during the year.
https://www.irs.gov/individuals/tax-withholding-estimator

20. Where can I track my tax refund?

Use “Where’s My Refund” on IRS.gov.
https://www.irs.gov/refunds