News overview
U.S. Treasury Secretary Scott Bessent said that many Americans may receive larger-than-usual tax refunds during the 2026 tax filing season, following income tax cuts that take effect in 2025.
Speaking on the All-In Podcast on December 27, Bessent—who is also currently overseeing the Internal Revenue Service (IRS)—explained that provisions of the OBBBA passed in July could be implemented in a “catch-up” manner, resulting in higher refunds for taxpayers.
Because a large portion of workers did not adjust their tax withholding levels throughout 2025, many households are expected to have overpaid their taxes and may receive refunds when filing their returns. According to Bessent, refund amounts could range from $1,000 to $2,000, depending on the number of earners in a household.
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Independent assessments
This assessment aligns with analysis from the Tax Foundation, a nonpartisan U.S. tax policy research organization. According to the Foundation, tax refunds in the upcoming filing season are likely to be higher than average, driven by recently enacted tax reductions.
Estimates suggest that income tax cuts under the OBBBA could reduce total personal income tax liabilities by approximately $144 billion in 2025, with around $100 billion potentially reflected in tax refunds. While not all taxpayers will see a significant increase, average refunds could rise by up to $1,000 in some cases.
Why refunds may increase
The primary reason for higher refunds is that tax rates and deductions have been reduced, while many workers continued to have taxes withheld from their paychecks at previous levels.
When taxpayers file their returns, any excess tax paid beyond their actual liability is refunded. As a result, lower effective tax burdens combined with unchanged withholding can lead to larger refund amounts.
Policy changes contributing to this effect include expanded tax credits for families with children, increased standard deductions, higher caps on state and local tax (SALT) deductions, and new or expanded deductions related to seniors, auto loan interest, tip income, and overtime pay.
Implications for workers and recent immigrants
For individuals working legally in the United States—including those who have recently relocated under employment-based pathways—larger tax refunds may help ease short-term financial pressure, particularly during the early stages of settlement.
However, it is important to understand that tax refunds do not represent new income or government assistance. They are simply the return of taxes that were overpaid during the year. Actual refund amounts will vary depending on income level, household structure, and filing status.
Overall perspective
The prospect of higher tax refunds highlights the tangible impact of tax policy changes on household finances. For workers and new residents alike, understanding the nature of tax refunds is essential to maintaining realistic financial expectations and managing income effectively over the long term.
While increased refunds can provide temporary relief, sustainable financial planning should continue to be based on regular income, responsible spending, and accurate tax filing practices.
