‘It Could Be One of the Largest Tax Refund Seasons Ever’

Tax season could feel much more generous next year, with the average American’s refund expected to rise by about $1,000, according to a new analysis from Piper Sandler. That would bring the typical IRS refund to roughly $4,151 for the 2026 filing season, CBS News reports.

The increase is tied to the major tax and spending law signed by President Trump in July, which introduced several retroactive tax breaks for the 2025 tax year. Key changes include eliminating taxes on certain overtime and tipped income and raising the cap on state and local tax (SALT) deductions from $10,000 to $40,000.

Don Schneider of Piper Sandler predicts Americans will be “surprised by really, really large refunds,” about a third larger than usual. Total refunds are expected to climb from the typical $270 billion to around $360 billion. Because most taxpayers haven’t adjusted their withholding under the new rules, the boost will hit all at once when people file in early 2026.

However, the benefits won’t be spread evenly. Middle- and upper-middle-income households, earning between $60,000 and $400,000, are likely to see the biggest gains. An earlier Tax Policy Center analysis found that people earning over $217,000 will collect six of every ten dollars from the new tax breaks.

Some advantages taper off for the highest earners: the expanded SALT deduction, for example, begins to phase out after $500,000 in income. Lower-income households are unlikely to see much benefit from the SALT change, since it only affects those who itemize deductions and pay state and local taxes above the standard deduction.

“This isn’t going to the very bottom of the distribution. It isn’t going to the very top of the distribution either,” Schneider says. Still, he adds, “it could be one of the largest tax refund seasons ever.”

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