Taxes: Ready for that big, beautiful refund?
Americans will get to keep more of their cash this year, giving the economy a lift, said The Economist. The One Big Beautiful Bill Act passed by congressional Republicans last July should result in “jumbo-size refund checks” being sent to many taxpayers in the coming months, with estimates for the aggregate boost ranging from $30 billion to $100 billion. For the average taxpayer in 2026, that means “$3,800 back from the government, compared with $3,000 over the past two filing seasons,” according to the Tax Foundation. Other analyses suggest refunds might be raised by $1,000 or more, particularly for those who are 65 or older, live in a high-tax state, or work in a job in which they can take advantage of newer provisions such as “no tax on tips” and “no tax on overtime.” And President Trump is deploying other “backdoor” tricks to reward some of his favored constituencies. He has cut the Internal Revenue Service’s workforce by 20,000, so “those who attempt to fiddle their taxes”—disproportionately the ultra-rich—“are more likely to get away with it.”
This is “the most significant expansion of taxpayer relief in modern history,” said Julio Gonzalez in The Hill. The standard deduction has increased again, rising to $31,500 for married couples, up from $30,000. “That increase alone translates into meaningful savings.” The cap on state and local tax deductions has been raised fourfold, “providing relief for taxpayers who felt punished for where they live.” And for families with kids, the child tax credit is increasing to $2,200 per child from $2,000, putting “more money back into parents’ pockets at a time when families are still coping with the lingering effects of Biden-era inflation.” Such changes “will make a huge difference” to millions of families.
But the biggest beneficiaries of the tax changes are, yet again, the highest earners, said Justin Fox in Bloomberg. About 62% of the advantages of the new tax breaks will go to those earning between $65,388 and $261,591, while 14% goes to the top 5% wealthiest people. On the other hand, “just 6% finds its way to the bottom 40%.” That cohort is the group “most likely to spend it,” whereas in the upper U.S. income distributions, tax refunds are more often added to savings or used to pay down debts—not exactly the economic stimulus that Republicans touted when they signed the legislation. Recent polling confirms as much, said Andrew Keshner in MarketWatch. Fifty-two percent of people expecting something back from Uncle Sam this season say “they plan to put it into savings,” the second-largest share since the National Retail Federation started surveying people about their tax refunds in 2007. The response suggests that most Americans view the tax cuts as an “anchor to keep them grounded rather than a catalyst to turbocharge their spending.”