On July 4, 2025, President Donald Trump signed what came to be known as the One Big Beautiful Bill Act. This legislation has reshaped federal tax policy by expanding deductions, revising credits, and adjusting how certain forms of income will now be taxed. Based on these changes, millions of Americans may receive significantly larger tax refunds next year.
Financial analysts now suggest that the changes brought about by the Big Beautiful Bill could translate into an average increase of about $1,000 in tax refunds for taxpayers when they file their taxes next year.
Your tax refund could be $1,000 higher in 2026. Here’s why. https://t.co/kGJV28MXWb
— CBS News (@CBSNews) November 26, 2025
The financial analysts at Piper Sandler were the first to identify this trend, noting that the average refund could rise from $3,151, which was last tax season’s average, to more than $4,000 for the upcoming filing year.
However, this boost is not guaranteed for everyone. Yet, this represents a significant shift for many middle-class households because they could add $400–$500 to their refund checks.
Upon further study, it has been determined that the reason for the projected increase is the timing of the law. OBBBA introduced new deductions and credits in July, and these will now be applied retroactively to 2025 income.
However, most employers will calculate tax withholding based on pre-OBBBA rules. This means that many workers had more taxes withheld than they ultimately will owe under the updated law.
Therefore, when these individuals file their taxes next year, they will adjust their actual tax liability with the amount withheld by their employers. In such cases, the difference will be paid back as tax refunds.
People who get paid in tips or overtime will benefit the most from this. This is because One Big Beautiful Bill Act has expanded tax breaks on these types of income.
People employed in the service industry, hospitality sector, healthcare support roles, and manufacturing roles that rely on overtime will see the most substantial gains.
“Americans have not changed their [tax] withholdings. So we are going to see substantial, substantial refunds to working families in the first quarter of 2026.” – Scott Bessent
Estimated Median Refund Boost (Typical Household): ~$800
Below is a chart estimating when these… pic.twitter.com/JH8Xp92tJE
— Trader 88 (@bunchofnumberz1) November 24, 2025
There is a certain group of people who will benefit the most next season.
- Middle-class and upper-class earners are among those who will experience several expanded deductions and will receive maximum benefits.
- In states where State and Local Taxes (SALT) are high, taxpayers will gain benefits as OBBBA has raised the cap on SALT deductions.
- Families with children will also be among the beneficiaries due to the enhanced Child Tax Credit.
- Due to an additional age-based deduction, older Americans will also benefit next tax season.
- Workers who earn regular tips, bonuses, or overtime pay will also be included in this group.
However, one must remember that this is not a universal boost, meaning not everyone will see such refund amounts on their tax return. As filing season soon begins, taxpayers are encouraged to review their withholding and understand the new credits now available to them. They should also consult a tax professional if they think they might need it.
