The Government Will Send the Average American an Extra $1,000 in 2026. Here's Why.

Core Insights - The average American is expected to receive an additional $1,000 in tax refunds in 2026, totaling around $100 billion in extra refunds due to changes in tax regulations [3][4][6]. Tax Refunds Overview - Tax refunds are projected to be significantly larger in 2026 as a result of the "big, beautiful bill" enacted by President Donald Trump, which created new tax savings opportunities [4][6]. - The IRS did not adjust withholding tables to reflect the new tax rules, leading to over-withholding by employers and consequently larger refunds for workers [5][6]. Impact of the "Big, Beautiful Bill" - The "big, beautiful bill" is estimated to have caused a $144 billion reduction in individual taxes owed in 2025, resulting in higher-than-expected tax refunds for many Americans [6]. - Taxpayers who qualify for new tax credits, such as those for auto loan interest, are likely to see the most significant increases in their refunds [7]. Eligibility for Increased Refunds - Various tax reductions included in the "big, beautiful bill" contribute to the larger refunds, including: - Increased child tax credit - Increased standard deduction - Increased state and local tax deduction - New deduction for up to $10,000 in auto loan interest - New deduction for up to $25,000 in income from tips - New deduction for up to $12,500 in overtime income [8].