Treasury Secretary Scott Bessent said Americans can likely expect larger bank balances during the upcoming tax season.
Bessent noted that tax cut provisions in President Donald Trump’s One Big Beautiful Bill Act (OBBA) will result in many Americans receiving a bigger-than-average tax refund next year. The bill, signed into law in July, will be applied retroactively starting January 1.
Since most U.S. workers have not adjusted their withholdings, substantial refunds are expected in 2026, according to Bessent, who also serves as acting IRS commissioner. This follows predictions of the “biggest refund cycle ever” in American history—though there’s a catch.
“I can see that we’re gonna have a gigantic refund year in the first quarter because working Americans did not change their withholdings,” Bessent said on the All-In Podcast. “I think households could see, depending on the number of workers, $1,000–$2,000 refunds.”
The Tax Foundation, a nonpartisan tax policy nonprofit, confirmed this outlook, saying that tax refunds will likely be larger than usual due to OBBA’s tax cuts for 2025. The foundation estimates individual taxes were reduced by $144 billion in 2025 because of the legislation, with roughly $100 billion expected to go toward tax refunds.
The IRS explained that withholding tables were not adjusted after the law passed, meaning workers continued to withhold more from paychecks than required under the new law. “As a result, instead of gradually receiving the benefit through higher take-home pay, most taxpayers will receive it all at once when they file their returns,” the agency said.
The larger refunds come from seven major provisions in OBBA, including enhancements to the child tax credit, standard deductions, increased SALT deduction limits, and new or expanded deductions covering seniors, auto loan interest, tip earnings, and overtime pay.
The IRS has set April 15, 2026, as the deadline for submitting tax returns. Officials advise taxpayers to prepare bank account information, W-2 and 1099 forms, and documentation of digital asset activity.
“It is important for taxpayers to get ready now because the One Big Beautiful Bill can significantly affect federal taxes, credits, and deductions,” the IRS said in November. “The IRS and Treasury are implementing the new legislation, including guidance on new deductions such as no tax on tips, no tax on overtime, no tax on car loan interest, and the temporary deduction for seniors.”
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