Tax Refund Expectations 2026: Why Many Americans May Get More Than Expected

A March 2026 survey reported by Yahoo Finance found that most Americans expect their tax refunds to be smaller this year. But tax experts say many filers may actually receive larger refunds than anticipated, thanks to several tax law changes that took effect for the 2025 tax year.

Source: Yahoo Finance — Most Americans Expect Lower Tax Refunds

Why People Expect Smaller Refunds

Public perception of tax refunds is shaped more by headlines than by actual tax code changes. Several factors are fueling the expectation of lower refunds:

Inflation concerns. Many taxpayers assume that higher costs of living mean higher taxes or smaller refunds. In reality, the IRS adjusts tax brackets, standard deductions, and credit amounts annually for inflation — these adjustments generally work in taxpayers’ favor.

Political uncertainty. With significant tax legislation enacted in 2025, many filers are unsure how the changes affect them personally. When people don’t understand tax changes, they tend to assume the worst.

Social media misinformation. Tax advice on TikTok and other platforms frequently contains inaccurate claims about refund amounts, credit eligibility, and filing strategies. See our guide on TikTok tax advice dangers for common myths.

Changes That May Increase Refunds

Several provisions of the One Big Beautiful Bill (OBBB) and other 2025 tax legislation created new or expanded benefits that many filers don’t realize they qualify for:

Increased Child Tax Credit

The Child Tax Credit increased to ~$2,200 per qualifying child for 2025, up from $2,000. While this increase may seem modest, it adds up quickly for families with multiple children. A family with three qualifying children receives roughly $600 more than under the previous credit amount.

For full details on eligibility and phase-outs, see our Child Tax Credit guide.

No Tax on Tips (OBBB)

Workers in traditionally tipped occupations — restaurants, bars, hotels, salons, rideshare, delivery — may be eligible for a new deduction on tip income up to ~$25,000. This is a significant new benefit that many service workers may not realize they qualify for.

The deduction applies to cash and reported tips for eligible occupations. Self-employed gig workers delivering food or providing rideshare services also qualify under IRS Notice 25-69. See our tip income reporting guide for eligibility details.

No Tax on Overtime Pay (OBBB)

Overtime wages — hours worked beyond 40 per week — may qualify for a partial deduction. The benefit is structured as a deduction up to $12,500 for single filers ($25,000 for married filing jointly). Workers who regularly earn overtime may see a noticeable increase in their refund.

For details on how this interacts with your specific situation, see our overtime pay tax benefits guide.

Inflation-Adjusted Tax Brackets

The IRS inflation adjustments for 2025 shifted all seven tax bracket thresholds upward. This means some income that was previously taxed at a higher marginal rate now falls into a lower bracket. The standard deduction also increased, reducing taxable income for the majority of filers who don’t itemize.

See our 2026 inflation adjustments guide for the complete bracket table.

Earned Income Tax Credit (EITC)

The EITC — the largest refundable credit for low and moderate-income workers — was also adjusted for inflation. The maximum credit amounts and income phase-out thresholds increased, meaning more workers qualify and qualifying workers may receive slightly more.

The EITC is frequently underclaimed because eligible filers either don’t know about it or assume they don’t qualify. If your earned income is below approximately $63,000 (varies by filing status and number of children), check your eligibility.

Average Refund Trends

The average federal tax refund fluctuates year to year based on withholding patterns, tax law changes, and economic conditions. For context:

• The average refund has historically ranged from $2,700 to $3,200 in recent years
• Refund size is primarily determined by overwithholding — how much more was taken from paychecks than the actual tax liability
• A larger refund isn’t necessarily better — it means the government held your money interest-free all year

How to Maximize Your Refund

1. Claim all credits you qualify for. The EITC, Child Tax Credit, education credits, and saver’s credit are commonly missed.

2. Don’t overlook new deductions. The OBBB tip and overtime provisions are brand new — many tax software programs will prompt for them, but only if you enter the right income categories.

3. Choose the right filing status. Head of household status provides a larger standard deduction and more favorable bracket thresholds than single filing.

4. File electronically with direct deposit. E-filed returns with direct deposit receive refunds in approximately 21 days versus 6-8 weeks for paper returns mailed with checks.

5. Use free filing options. Don’t pay for tax software if you qualify for IRS Free File (AGI $89,000 or less).

When to Expect Your Refund

If you file electronically and choose direct deposit, the IRS typically issues refunds within 21 days. Returns claiming the EITC or Additional Child Tax Credit may experience slight delays due to the PATH Act, which requires the IRS to hold these refunds until mid-February.

Track your refund status at IRS.gov/refunds — status updates are available 24 hours after e-filing.

For a complete overview of tax changes affecting your 2025 return, see our 2024 vs 2026 tax law comparison and federal income tax guide.