2026 Tax Refund Season Could Bring Bigger Checks: IRS Withholding Decision, “Free Money” Buzz, and Key Filing Changes Under the One Big Beautiful Bill Act

As the U.S. heads into the 2026 tax-filing season, a familiar phrase is resurfacing in headlines and TV segments: “free money.” The reality is more technical—but potentially meaningful for millions of households.

The Internal Revenue Service (IRS) says it did not update federal income tax withholding tables for Tax Year 2025 as it phases in the One Big Beautiful Bill Act (OBBBA). That means many workers may have had taxes withheld from paychecks as if certain new deductions and tax breaks didn’t exist—setting the stage for larger-than-usual refunds when 2025 returns are filed in early 2026. ^[1]

At the same time, politicians and pundits are making sweeping claims about who benefits and how much. A Fox Business segment, for instance, quoted Social Security Administration Commissioner Frank Bisignano—described in that report as the IRS’s “first CEO”—claiming “94%—plus” of middle-class Americans will see a boost and forecasting “the biggest refunds” yet. ^[2]

So what’s actually happening, who is most likely to see a bigger check, and what can you do now to avoid surprises?

Why 2026 tax refunds could be bigger than usual

The biggest driver: withholding tables didn’t change for 2025

On Aug. 7, 2025, the IRS announced that as part of the staged rollout of OBBBA changes, there would be no changes for Tax Year 2025 to:

Federal income tax withholding tables
Key payroll and information returns such as Form W‑2, many Forms 1099, and Form 941 ^[3]

In plain English: many paychecks likely kept withholding at “old” assumptions, even though the law created or expanded deductions that can reduce 2025 tax bills. If your withholding stayed high while your eventual tax liability falls, the gap often shows up as a bigger refund at filing time.

That’s the dynamic CNBC anchor Kelly Evans highlighted in her “Free money is coming” newsletter—pointing to the withholding lag as a reason refunds could jump. (The underlying IRS decision is confirmed in the IRS release.) ^[4]

Analysts and officials are openly predicting “record refunds”

A study frequently cited by policymakers—Piper Sandler, using Joint Committee on Taxation (JCT) data—has been used to support projections of roughly an extra $1,000 in refunds for many filers. House Ways and Means Republicans said the study suggests taxpayers could take home $91 billion more in refunds and keep $30 billion more in paychecks due to reduced withholdings (once withholding catches up). ^[5]

A separate national news report quoted Treasury Secretary Scott Bessent estimating $100–$150 billion of refunds in the first quarter of 2026, framing it as a direct result of unchanged withholding combined with the new law. ^[6]

Reality check: a “bigger refund” isn’t the same as “free money”

Tax professionals often stress a key point: a refund is usually your own money coming back—an overpayment through withholding during the year.

The Nexstar-distributed tax explainer republished by iHeart quotes tax attorney Adam Brewer putting it bluntly: a larger refund typically means you overpaid and essentially gave the government an interest-free loan—and he notes some people may prefer to adjust withholding to keep more in each paycheck instead. ^[7]

Refunds can still feel like a windfall, especially for families who use them for debt, rent, or car repairs. But for planning purposes, it helps to separate:

Tax relief (lower overall tax liability)
from
A big refund (how and when you paid that tax during the year)

The key OBBBA tax changes hitting 2025 returns (filed in 2026)

The IRS describes several OBBBA provisions that apply starting with the 2025 tax year—the returns most people file in early 2026. ^[8]

Below are the most talked-about changes, and what the IRS says to watch.

1) “No tax on tips” — structured as a new deduction

Despite the slogan, the IRS describes this as a deduction for qualified tips (not an automatic exemption from reporting). Key IRS points include:

Available for 2025 through 2028
Up to $25,000 maximum annual deduction
Applies to employees and some self-employed individuals
Only voluntary tips qualify (mandatory service charges do not)
Phases out above $150,000 modified AGI ($300,000 joint) ^[9]

2) “No tax on overtime” — also a deduction, with a cap

The IRS describes a deduction for qualified overtime compensation (generally the premium portion above the regular rate of pay). Key points:

Available for 2025 through 2028
Up to $12,500 maximum annual deduction ($25,000 joint)
Phases out above $150,000 modified AGI ($300,000 joint) ^[10]

3) “No tax on car loan interest” — a new deduction with eligibility rules

The IRS also describes a deduction for certain passenger vehicle loan interest, with rules that can trip people up:

Max annual deduction: $10,000
Applies to loans originated after Dec. 31, 2024
Must be for a qualifying vehicle purchased for personal use
The vehicle must meet eligibility criteria including final assembly in the United States
The deduction phases out above $100,000 modified AGI ($200,000 joint)
You generally need the VIN on the return for years you claim it ^[11]

4) Seniors: an additional $6,000 deduction (with phaseouts)

The Bipartisan Policy Center (BPC) breaks down OBBBA’s additional senior deduction, describing:

An extra $6,000 deduction per person age 65+
Phaseout starting at $75,000 (single) / $150,000 (married)
Full phaseout by $175,000 (single) / $250,000 (married)
The provision is described as expiring after 2028 ^[12]

5) Standard deduction changes (why this matters even if you don’t itemize)

One reason refunds could rise is that changes apply broadly, including people who don’t itemize.

BPC’s explainer lists the OBBBA standard deduction amounts as:

2025: $15,750 (single) and $31,500 (married filing jointly) ^[13]

And the IRS has also published inflation adjustments for Tax Year 2026, including updated standard deduction figures:

2026: $16,550 (single), $33,100 (married filing jointly), $24,825 (head of household) ^[14]

Who’s most likely to see a larger refund in 2026—and who might not

More likely:

You may be more likely to see a bigger refund if you:

Work in roles where qualified tips or qualified overtime are common (and you qualify under IRS rules) ^[15]
Are 65+ and fall within the income ranges where the additional deduction applies ^[16]
Benefit from broader changes like the standard deduction (and your withholding didn’t adjust during 2025) ^[17]

Less predictable (or potentially smaller):

Refund outcomes are highly individual. You might not see a bigger refund—or could even owe—if you:

Already adjusted your withholding downward during 2025
Have large non-wage income (gig work, investments) and didn’t pay enough estimated tax
Don’t qualify for the new deductions due to income limits or eligibility rules ^[18]

The distribution debate: “tax relief” isn’t equal across income groups

Independent policy analysts argue the benefits skew upward.

The Tax Policy Center wrote that, looking at the bill’s revenue provisions, the measure is regressive, estimating the bill would cut 2026 taxes by about $2,900 on average, with the largest benefits flowing to higher-income households. It also notes that when spending cuts are considered, low-income households could end up worse off. ^[19]

That context matters when evaluating broad claims like “94% of middle-class Americans will see tax relief,” which comes from administration-linked messaging rather than a single neutral scorekeeper’s headline conclusion. ^[20]

How to prepare now (and avoid a nasty surprise)

This isn’t tax advice—tax law is personal, and the new rules introduce extra edge cases. But there are practical steps the IRS itself suggests.

1) Decide what you want: a bigger refund, or bigger paychecks

If you prefer a larger take-home paycheck instead of waiting for a refund, the IRS says you may need to submit a new Form W‑4 to your employer to account for eligible deductions. ^[21]

2) Use IRS tools—knowing their current limits

The IRS says its Tax Withholding Estimator is not yet updated for certain OBBBA provisions, including tips, overtime, car-loan-interest, and senior deductions—though it has been updated to reflect the increased standard deduction and child tax credit amounts. ^[22]

If you’re claiming the new “no tax on …” deductions, the IRS points taxpayers toward either:

The IRS deductions worksheet (for Step 4(b) of Form W‑4), or
A qualified tax professional ^[23]

3) Keep records—especially for tips and overtime

Because the IRS said it would not change certain information returns and payroll forms for 2025, documentation matters. The IRS also indicates it is coordinating updated guidance and forms for Tax Year 2026 reporting. ^[24]

4) If you plan to claim vehicle loan interest, save the VIN and purchase/loan documents

The IRS specifically notes VIN reporting and other eligibility requirements (including final assembly in the U.S.) for the vehicle-interest deduction. ^[25]

5) Consider expert help if your situation is complex

Economists and tax pros have warned that withholding changes can backfire if you cut too much and wind up owing in April.

Investopedia reported that Nancy Vanden Houten, lead U.S. economist at Oxford Economics, described how withholding lag could create larger refunds—while also emphasizing the planning tradeoff of higher take-home pay now versus a bigger refund later. ^[26]

When to expect your refund—and how to track it

The IRS repeatedly emphasizes a baseline rule of thumb:

Most refunds are issued in less than 21 calendar days for taxpayers who file electronically and choose direct deposit—but some returns take longer due to errors, review, or missing information. ^[27]

To track your status, the IRS encourages using “Where’s My Refund?” and also publishes “myth-busting” guidance warning people not to count on refunds arriving by a specific date. ^[28]

Context: how big are refunds usually?

IRS “filing season statistics” provide a useful baseline for what “normal” looks like.

For the 2025 filing season (covering 2024 returns), an IRS weekly snapshot reported an average refund amount around $3,004 and an average direct deposit refund around $3,151 at that point in the season. ^[29]

That helps explain why an “extra $1,000” projection is grabbing attention: if it materializes broadly, it would be a substantial percentage jump for many households. ^[30]

“Trump Accounts” are separate from refunds—but part of the same conversation

Alongside refund talk, some OBBBA provisions are being promoted as longer-term financial boosts.

Fox Business reported that Commissioner Frank Bisignano said “Trump accounts” (a savings initiative for children) would begin accepting contributions on July 4, 2026 and suggested that $1,000 could compound dramatically over decades. ^[31]

Investopedia’s bill breakdown similarly described the accounts as being seeded with $1,000 for eligible children born in a set window and allowing additional contributions under program limits. ^[32]

These accounts are not the same as a tax refund—but they’re being discussed in the same political messaging about “putting money back in Americans’ pockets.” ^[33]

Bottom line

The strongest, least-speculative takeaway is this:

The IRS confirmed no 2025 withholding-table update tied to OBBBA provisions. ^[34]
The IRS also confirms multiple new/expanded deductions that apply to Tax Year 2025—the returns filed in early 2026. ^[35]
Put together, that combination can plausibly lead to bigger refunds for many filers, even though the size and distribution will vary widely by income, filing status, and eligibility. ^[36]

If you want to be proactive, the most practical move is to review your withholding strategy and your documentation now—especially if you expect to claim the new “tips,” “overtime,” “senior,” or “car loan interest” deductions—because that’s where the biggest gaps (and biggest surprises) are likely to show up.