Who Might Not See a Bigger Tax Refund?
Despite the optimistic projections, not everyone will benefit from the new tax law. Some individuals could see smaller refunds or even owe more in taxes over time.
Low-Income Households
According to a recent report, some lower-income households could lose modest amounts in the long run due to changes in federal spending programs.
- Families earning $53,000 or less could lose an average of $65 by 2033
- Taxpayers earning $18,000 or less could lose about 1.1% of their income by 2027
These losses are tied to reductions in Medicaid and other social programs rather than direct changes to tax brackets—but they still affect household finances.
Student Loan Borrowers Facing Taxable Forgiveness
Another major change involves student loan forgiveness taxation.
Under the Biden-era American Rescue Plan Act, forgiven student loan debt was temporarily excluded from federal income taxes. That exemption is ending. Starting soon, most student loan forgiveness will once again be federally taxable.
According to CNBC, a borrower with approximately $49,321 in forgiven student debt could face an additional tax bill ranging from $5,800 to over $10,000 during the 2027 filing season.
This could come as a shock to borrowers who expected forgiveness to be tax-free and highlights the importance of proactive tax planning.
