With the “one big, beautiful bill” passed earlier this year, Americans could see higher tax refunds next year. Overall, the refund boost is expected to come in at $50 billion, a 17% to 18% increase over the 2024 refunds.
For comparison, the year-over-year increase from 2024 to 2025 was just 2%. However, a new analysis from Nancy Vanden Houten for Oxford Economics cited by CBS News and USA Today this week noted that a “disproportionate share of the benefits will accrue to upper-income households.”
According to CBS News’ report, the Tax Policy Center also published an analysis in July that indicated that $6 of every $10 in new tax breaks provided by the “one big, beautiful bill” (retroactive to the start of this year) would go to the top 20% of households. That is, those with incomes of more than $217,000 per year.
In addition to tax deductions, tax credits, and tax overpayments by the self-employed, taxpayers allow certain amounts of their pay to be withheld each month in order to cover their taxes. If that amount comes in above what they owe in taxes, then they receive a refund. In other cases, it might come in below what is owed, and in that case the taxpayer has to provide more money to cover the difference.
To get refunds, taxpayers must file tax returns. After returns are filed, refunds should arrive within 21 days for e-filers and six weeks for mailed-in returns, though some may take extra time if corrections are needed.
Nearly 94 million taxpayers overpaid on their 2024 federal tax returns and received a refund, according to data from the Internal Revenue Service. Those refunds totaled $2,939 on average and came in at around $275 billion altogether.
“A 17% increase would be nearly $500 more [per refund], but remember, not all $50 billion in additional tax savings may be in refunds,” said USA Today.
In the “one big, beautiful bill” legislation signed by President Donald Trump this summer, tax reductions enacted under the 2017 Tax Cuts and Jobs Act passed during his first term in office were extended. New tax reductions were included as well, eliminating taxes on some overtime and tips.
Another change to taxes included in the bill was a lift on the cap on the deduction for state and local taxes, or SALT, from $10,000 to $40,000.
It’s “a change that is expected to primarily help higher-income Americans,” and that’s expected to deliver an extra $5.1 billion in total tax savings CBS News said. It explained that to benefit from the higher SALT cap, tax filers are required to itemize, and that is typically done by “high-income households with sizable deductions that surpass the standard deduction.”
USA Today said that employers are currently still calculating employee withholdings for 2025 taxes, but CBS also pointed out that the IRS hasn’t yet updated its withholding tables, citing Vanden Houten.
“[M]any taxpayers will pay too much in tax this year and see larger tax refunds or smaller tax bills next year than otherwise would be the case,” Vanden Houten said. She explained that could lead to a “windfall at tax time in 2026 through larger refunds and lower tax bills.”
Senior citizens are also expected to see bigger tax refunds early next year with a new $6,000 deduction for people over 65 years old included in the “one big, beautiful bill” legislation. Per the Oxford Economics analysis, the senior deduction could provide as much as $9.3 billion in tax savings.
“With so many Americans still struggling under the weight of high prices of everything from beef to insurance premiums, tax savings could be welcome news,” said USA Today. Still, it looks like Americans will still have to wait to see just how much the new tax policies will help their wallets on average.