Why Tax Refunds May Be Bigger in 2026

One key reason refunds may be larger next year has to do with timing and paycheck withholding.

Because the Trump/GOP tax bill was enacted mid-year in 2025, many of the new deductions and tax breaks were not immediately reflected in payroll withholding tables. That means employers may have withheld more federal income tax from paychecks than necessary.

When taxpayers file their 2025 returns in early 2026, those excess withholdings could translate into larger tax refund checks.

In other words, for eligible taxpayers, 2026 refunds may feel bigger not only because of new tax benefits—but also because those benefits weren’t fully applied during the year.