American taxpayers might be looking at a windfall next year, with the Donald Trump administration projecting that the 2026 tax filing season will deliver the largest average refunds on record.
Tax Filers To See $191 Billion Relief In 2026
According to a White House press release issued Nov. 19, tax filers could see an estimated "$1,000 bump" to their refunds next year. The administration attributes this surge to a package of working families tax cuts that will provide an aggregate of $191 billion in net new tax relief.
“In total, the working families tax cuts will give American taxpayers $191 billion in net new tax relief,” the White House stated.
The projection breaks down into two distinct financial benefits: filers are expected to take home an additional $91 billion in lump-sum refunds, while keeping an additional $30 billion in their regular paychecks due to reduced withholdings throughout the year.
Continuing Upward Trend
The projected 2026 surge builds on momentum established earlier this year. Data from the Internal Revenue Service (IRS) in March 2025 showed that the average federal income tax refund had already risen to $3,453, a 7.5% increase over the previous year.
Despite a drop in early filings, the IRS had distributed over $102.2 billion by late February 2025.
Clarity Amidst Complexity
The promise of larger checks comes as Washington moves to fix how the IRS communicates with the public. Awaiting the President's signature is the IRS Math and Taxpayer Help Act, a bipartisan bill passed by Congress earlier this month.
The legislation requires the agency to provide clearer, itemized explanations when flagging math errors, replacing previously confusing legal jargon with plain instructions on how to respond.
However, the road to these record-breaking refunds may face operational hurdles. In March, the IRS announced the layoff of over 6,000 employees, raising concerns about processing speeds.
Additionally, taxpayers with side hustles must now navigate a lower $5,000 reporting threshold for 1099-K forms, adding a layer of complexity to the upcoming season despite the promise of higher payouts.
Market Rebounds After Strong NVDA Earnings
After a consecutive four-day fall for the S&P 500 and Dow Jones indices, and more than four days for the Nasdaq, the markets rebounded to settle higher on Wednesday after blockbuster Nvidia Corp. (NASDAQ:NDA) third-quarter earnings.
The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, closed higher on Wednesday. The SPY was up 0.39% at $662.63, while the QQQ advanced 0.60% to $599.87, according to Benzinga Pro data.
The futures of the S&P 500, Nasdaq 100, and Dow Jones indices were trading higher on Thursday.
Read Next:
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo courtesy: Shutterstock/ IAB Studio
