For some people, tax refunds could turn out to be much fatter in 2026 than they’d expect after dramatic changes in key tax rules hit 2025 federal income tax returns.
The new tax breaks come with restrictions that many tax filers likely won’t expect and definitely won’t understand without taking time to review them.
And you’ll need to file a new Schedule 1-A — which was only available online in draft form in late December — to claim key tax breaks, including those for overtime, tips, seniors and car loans. You cannot file a draft form with the IRS.
Another big change: The IRS will no longer be issuing tax refunds by paper check to most individual taxpayers. If you’ve opted to receive a paper check for years, you’ll need to figure out a way to get your federal income tax refund via direct deposit.
If someone doesn’t have a bank account, they can use prepaid debit cards or digital wallets. The IRS said limited exceptions will be available.
“Only 7% of individual refund recipients received their refunds by check through the mail,” the IRS stated.
In 2025, the average federal income tax refund hit $3,052 as of the week ending Oct. 17, the latest data published by the IRS. That was up 1.6% from a year earlier.
The Internal Revenue Service had not yet issued its official start date for the 2026 tax season as of Dec. 31. That’s not too unusual because that start date is usually announced in January.
“We expect to have a ‘Go Live’ date any time now,” said Mark Steber, chief tax officer for Jackson Hewitt Tax Services.
In 2025, the IRS kicked off the tax season on Monday, Jan. 27, when the agency began accepting and processing federal income tax returns.
This year, tax experts told me that they would not be shocked if we saw a slight delay to the tax season kickoff — meaning that early filers could have to wait a bit longer for tax refunds, too.
Feb. 2 lands on a Monday in 2026, and some speculate that tax season could kick off that week, according to George Smith, a CPA with Andrews Hooper Pavlik in Bloomfield Hills, Michigan.
The 2026 tax season will have its quirks, given that the IRS has faced significant job cuts and turnover in leadership in 2025. Currently, Treasury Secretary Scott Bessent serves as acting IRS commissioner, in addition to his top job at Treasury.
Frank Bisignano — the commissioner of the Social Security Administration — was named to a newly created position of CEO of the IRS in October. Bisignano will report directly to Bessent, managing the organization and overseeing all day-to-day IRS operations. Bisignano will continue his role as commissioner of the Social Security Administration.
“These are not like regular years,” Jackson Hewitt’s Steber said.
While many people drag their feet and file closer to the typical April 15 deadline, millions of people eagerly file tax returns as early as they can to get their hands on tax refund cash.
During the initial days of the filing season in 2025, the IRS had received more than 13.1 million tax returns as of Jan. 31, 2025. More than 3.2 million refunds were processed in those few short days with an average refund of $1,928 at that time.
As the tax season progressed, we saw a bigger jump in the size of average refunds. In 2025, the average federal income tax refund hit $3,052 as of the week ending Oct. 17, the latest data published by the IRS. That was up 1.6% from a year earlier.
Through Oct. 17, the IRS received more than 163.5 million individual income tax returns. It issued about 102.1 million income tax refunds.
The federal government issued more than $311.6 billion in income tax refunds through Oct. 17, up 0.6%.
Do you have to file taxes in 2026? Here’s why you might want to
No one, obviously, can get a tax refund until after the IRS receives and processes the tax return. You can prepare your return when you have your paperwork in order — and when the IRS has new forms available.
But you cannot submit your return to the IRS until the official start date or afterward.
Tax returns that claim the earned income tax credit, which can have substantially larger refunds, always face delays by law that require that those refunds be issued after mid-February.
The IRS issues most refunds in less than 21 days, especially when the return is filed electronically, and the refund is to be made via direct deposit into a bank account. Some refunds arrive even earlier than that.
Several significant changes in tax rules hit 2025 federal income tax returns for the first time. Many of the changes — such as tax breaks on tips and overtime — generated big headlines, but the real trick for taxpayers will involve digging into the tiny details.
The One Big Beautiful Bill Act was signed into law by President Donald Trump on July 4. Many new tax breaks are retroactive to Jan. 1, 2025, and will apply to the 2025 federal income tax returns that you file in early 2026.
Here’s what to keep in mind as we prepare for the upcoming 2026 tax season:
A draft form was online as of Dec. 31, but you’d need an actual form to file a return and claim key deductions for a bigger refund.
A point to remember: Taxpayers can claim key tax breaks for tips, overtime, car loans and seniors even if they take the standard deduction and do not itemize deductions.
Many but not all will see bigger refunds: We’re hearing much buzz from the Trump administration indicating that refunds could be significantly bigger in 2026. And they will be for many but not all tax filers.
Kevin Hassett, director of the White House National Economic Council, stated on Fox Business on Dec. 18 that “people are going to get massive refund checks.”
Hassett, who many expect will be nominated in 2026 by Trump to serve as chair of the Federal Reserve, said the country will see “the biggest refund cycle ever in the history of America.”
Garrett Watson, director of policy analysis at the nonpartisan Tax Foundation, said refunds are likely to be higher for some groups who qualify for new tax breaks, particularly since many taxpayers have not had any adjustments to tax withholding on their 2025 paychecks that would take the new deductions into account.
The IRS did not adjust withholding tables after the law passed, the Tax Foundation noted, so workers generally continued to withhold more taxes from their paychecks than the new law required.
“As a result, instead of gradually receiving the benefit of the tax cuts through higher take-home pay during the year, most taxpayers will receive it all at once when they file their returns,” the Tax Foundation stated in an update Dec. 17.
To break down the numbers, Watson said first consider the baseline refunds before any impact of the new tax cuts.
The Tax Foundation estimates that baseline refunds would likely remain stable, averaging around $330 billion overall and around $3,100 on average for tax filers, as has been the case from 2023 through last year.
In each of the past two tax years, the Tax Foundation said, more than 100 million taxpayers have received refunds averaging around $3,000.
“The new tax cuts from the One Big Beautiful Bill Act will add to this refund number,” Watson said.
The size of federal income tax refunds in 2026 is going to vary dramatically, depending on the taxpayer’s situation.
The Tax Foundation noted that private-sector economic analysis suggests that tax breaks in the One Big Beautiful Bill Act could drive average refunds up by somewhere between $300 to $1,000 — or add up to $100 billion to total refunds paid out during the 2026 filing season.
Watson noted that would translate to an average refund that could be upwards of $4,000 under the right conditions.
“The biggest items driving this increase are targeted to certain types of income or certain taxpayers, like seniors,” Watson said.
As a result, he said, the projected average obscures a large variation between taxpayers who may benefit greatly from some new tax breaks and other taxpayers who may see only small changes to refunds.
Some key benefits that could boost refunds include:
A new $6,000 additional deduction for many who are 65 and older. That tax break starts phasing out for taxpayers with a modified adjusted gross income of $75,000 if single and $150,000 for married couples filing jointly.
A new auto loan interest deduction that can apply to up to $10,000 in interest paid in a year. That deduction phases out by $200 for every $1,000 of modified adjusted gross income above $100,000 for single filers and $200,000 for joint filers. A single person with $149,001 in income or more would not receive any deduction, said Mark Luscombe, principal analyst for Wolters Kluwer Tax & Accounting in Riverwoods, Illinois. Very specific rules apply. Consumers would have had to have taken out a car loan in 2025 to buy new cars with final assembly in the United States to claim the deduction on their 2025 federal income tax returns, if they qualify.
A new, but fairly complex deduction for up to $25,000 in tip income that starts phasing out when taxpayers earn more than $150,000 if single or $300,000 if married filing a joint return.
A new deduction for up to $12,500 in overtime income for singles or $25,000 for joint filers. That deduction starts phasing out when taxpayers earn more than $150,000 if single or $300,000 if married filing a joint return.
A maximum child tax credit increase of $200
The standard deduction will increase by $750 for single filers and $1,500 for joint filers.
For 2025 returns, taxpayers will be asked to provide the IRS with their direct deposit information or demonstrate that they qualify for an exception and should still receive a check.
Someone who typically received a paper tax refund check would want to work ahead to get direct deposit information before trying to complete their tax return — or even open an account in advance so that you’d be ready when you do file.
You can see FDIC.gov/getbanked for options for opening an account online with a low opening deposit. Or see mapping.ncua.gov to find a credit union.
If you don’t do anything, it’s possible you’re going to wait a long time for that federal income tax refund.
During the e-filing process, according to the National Taxpayer Advocate Service, individuals will receive an alert or message if their banking information is missing from the 2025 tax return.
“These tax returns will still be accepted and processed without the direct deposit information, but taxpayers should understand that refunds will be delayed,” the blog states.
After filing, the blog explains, the IRS will send taxpayers a letter requesting banking information within 30 days if their return fails to include the information or if the direct deposit has been rejected by their bank.
The letter will also provide information on exceptions and provide a dedicated phone line taxpayers may call to request an exception and request that paper check be issued.
After six weeks, the IRS will resort to issuing a paper check to taxpayers to prevent interest from accruing on the refund amount, according to the blog by the National Taxpayer Advocate Service, which was updated Dec. 4.
It’s essential that you provide accurate information for your account number and the correct routing number for the financial institution.
Tax season — whether it starts in late January or early February — is bound to be unlike any other we’ve seen in recent years. It will not hurt to start brushing up on the rules and gathering the paperwork as early as you can.
And really, get ready to pack your patience.
Contact personal finance columnist Susan Tompor: stompor@freepress.com. Follow her on X @tompor.
