American taxpayers are likely to experience their biggest surprise yet when they file their returns for the next tax year. According to Futbolete.com, IRS refunds will reportedly be larger than any amount seen in the history of the tax system.
However, the cash flow is neither the result of a technical glitch nor an error in the process. Instead, it is the result of a planned political decision and a law whose impact, whether intentional or overlooked, will lead to taxpayers seeing significantly inflated tax refunds in 2026.
This whole process began with Trump’s signing of the One Big Beautiful Bill Act, a major tax-cut law, on July 4, 2025. However, the law came into effect with a unique twist. While its individual tax breaks applied retroactively to the entire year of 2025, the IRS failed to update the withholding tables on workers’ paychecks.
As a result, taxes continued to be deducted at pre-law levels, as if the cuts had never happened. In simple terms, the law applied in a way that made it seem like it had been effective since January 1, even though it was signed in July. Therefore, all income earned since January 1 was covered by the new and lower tax regulations.
However, taxes paid earlier in the year are being recalculated under the new rules following the filing of returns. While taxpayers paid taxes under the old rules for the first half of the year, the law made it seem like they owed much less, making them eligible to get larger refunds this year.
Donald Trump has officially signed the ‘One Big Beautiful Bill’ into law on Independence Day.
The bill extends tax cuts for the wealthy, overhauls programs like Medicaid and SNAP, increases border and military spending, along with a multi-trillion dollar increase to the debt… pic.twitter.com/0e2KbNOzCf
— Pop Base (@PopBase) July 4, 2025
Economists are calling this the “lump-sum effect” as taxpayers unknowingly accumulated the benefit over time instead of receiving modest gains spread across each paycheck. Now that amount, reportedly estimated to be around $100 billion to $150 billion nationwide, is expected to be returned to taxpayers.
Last month, Treasury Secretary Scott Bessent himself revealed that taxpayers can expect to see $1000 to $2,000 more in their tax refunds this year.
“I can see that we’re gonna have a gigantic refund year in the first quarter because working Americans did not change their withholdings,” Bessent said during an appearance on the All-In Podcast. “I think households could see, depending on the number of workers, $1,000- $2,000 refunds,” he added.
According to firms such as Piper Sandler and the Tax Foundation, the average refund is likely to go beyond $3,800 this year, a jump of nearly $750 from the previous year.
🚨BREAKING: Scott Bessent says Americans will likely receive $1,000-$2,000 in tax refunds early-2026, before the midterms.
“$100B-$150 BILLION refunds in Q1, go directly to Americans’ pockets!”
“Our estimate is $1,000, $2,000 per household, depending on the number of workers.” pic.twitter.com/aDqtRmN6HR
— Derrick Evans (@DerrickEvans4WV) December 16, 2025
For most taxpayers, a boom in the refunds will feel like a surprise bonus. For the economy, this might feel like a sudden influx of cash, which in turn may briefly boost spending, especially in terms of retail sales. However, beyond what appears to be a gift on the surface lies a tax policy that restricts money from getting distributed evenly.
The One Big Beautiful Bill is tailored for specific groups of taxpayers. Those who work in the service sector, especially those who work long hours, can experience the benefits due to the deductions for tips being tax-free for up to the payment of $25,000 and for overtime up to $12,500.
Meanwhile, domestic manufacturers can benefit from the expanded relief on interest for loans on U.S.-assembled cars. The law also supports higher-income households and high-rated taxpayers, mostly from the blue states, by raising the cap on the State and Local Tax Deduction (SALT) to $40,000.
Therefore, while many middle-and upper-income families may see tax refunds jump by thousands of dollars, an analysis by the Congressional Budget Office suggests that the lowest-income Americans could end up being affected for the worse, as broader structural changes quietly work against them.
So, despite a potential increase in tax refunds, the law continues to spark debate. The Bipartisan Policy Center believes that it will add at least $3.4 trillion to the national debt over the next decade.
Supporters argue that the surge in consumer spending and business investment fueled by the tax cuts will help make up for the lost revenue. Critics, however, warn that the policy could threaten long-term stability after a brief burst of consumer spending, ultimately leaving future taxpayers to suffer in the long run.
