IRS Issues Nationwide Warning as Trump Promises Record Tax Refunds: What the ‘Big Beautiful Bill’ Means for Your 2026 Tax Return

Published: December 6, 2025

As 2025 winds down, two things are happening at once for American taxpayers:

The IRS is warning people to act before year’s end as it phases out paper refund checks and prepares for major changes to the 2026 filing season. ^[1]
The Trump administration is promising that 2026 will bring the “largest tax refund season ever” thanks to the new One Big Beautiful Bill Act (OBBBA), even as economists warn the coming “refund surge” could reignite inflation. ^[2]

Here’s a detailed look at the latest news as of December 6, 2025—and what you should do now to protect your refund and your wallet.

The IRS’ Nationwide Notice: “Start Doing This Before Year’s End”

Paper checks are going away

In a series of announcements this fall, the IRS and Treasury confirmed that they’re moving away from issuing paper refund checks for most taxpayers:

For the most part, the IRS will stop issuing paper tax refund checks after September 30, 2025, as part of a broader push toward electronic payments under Executive Order 14247. ^[3]
Instead, refunds will be sent primarily via direct deposit or other secure electronic methods such as prepaid debit cards or digital wallets. ^[4]

The National Taxpayer Advocate has warned that if your 2025 return (filed in 2026) doesn’t include direct deposit information and you don’t qualify for an exception, the IRS may hold your refund for around six weeks before issuing a paper check. ^[5]

That warning is a big part of the “start doing this before year’s end” message being pushed in coverage by MassLive, Yahoo Finance and other outlets.

Six key prep steps the IRS is urging now

In a late November release, amplified today by outlets like The Sun and local media, the IRS is pushing Americans to prepare early for the 2026 filing season, which will start in late January. ^[6]

The agency highlights six big steps:

Gather all tax records now
W‑2s, 1099s, bank and brokerage statements, retirement account forms, digital asset transaction records, and any documents related to side gigs or self-employment.
Organize documents for deductions and credits
Receipts and records for child care, charitable giving, medical expenses, education costs, and new OBBBA-related deductions (tips, overtime, car loan interest, senior deduction).
Review life changes
Marriage, divorce, a new child, college enrollment, starting or closing a business, buying a home, or major medical issues can all change your tax picture.
Set up or verify direct deposit
The IRS and Treasury are urging people—especially those who still get checks—to open a bank or credit union account or choose another electronic option now. ^[7]
Create or log into your IRS Online Account
This will increasingly be the hub for updating banking information, checking “Where’s My Refund?”, and responding to IRS letters about electronic payment requirements. ^[8]
Understand how the One Big Beautiful Bill affects you
The IRS is explicitly telling taxpayers to learn about the new deductions and credits created by OBBBA so they can claim them correctly in 2026. ^[9]

What Is the One Big Beautiful Bill Act (OBBBA)?

The One Big Beautiful Bill Act is the Trump administration’s flagship 2025 tax law, signed on July 4, 2025. It extends and expands key provisions of the 2017 tax cuts and layers on new deductions aimed at workers and families, while pairing them with significant cuts to safety‑net and climate programs. ^[10]

From an individual tax perspective, OBBBA:

Raises the standard deduction in 2025 and again in 2026
- 2025: $31,500 for married filing jointly; $15,750 single; $23,625 head of household.
- 2026: $32,200 married filing jointly; $16,100 single; $24,150 head of household. ^[11]
Creates or enhances several deductions available starting with tax year 2025 (returns filed in 2026): ^[12]
- “No tax on tips” – Deduction of up to $25,000 in qualified tipped income for eligible occupations, subject to income phase‑outs.
- “No tax on overtime” – Deduction of up to $12,500 in qualifying overtime pay ($25,000 for married filing jointly).
- “No tax on car loan interest” – Deduction of up to $10,000 in interest on certain loans used to buy qualifying new, U.S.-assembled passenger vehicles for personal use.
- An enhanced senior deduction and larger child tax credit, plus higher limits on the SALT deduction for those who itemize.
Keeps withholding tables unchanged for 2025
The IRS explicitly decided not to update federal income-tax withholding tables or major payroll forms for 2025 to reflect the new law. Employers will keep using existing procedures this year. ^[13]

That last point is crucial: it’s one of the main reasons 2026 refunds are expected to jump.

Why 2026 Tax Refunds Are Expected to Surge

Because many OBBBA tax breaks apply retroactively to all of 2025, but withholding hasn’t been adjusted, millions of Americans have effectively been overpaying all year.

The “refund surge” math

Several recent analyses point to a historically large refund season in early 2026:

JPMorgan Asset Management estimates that, once the new OBBBA breaks are factored in, the IRS could issue refunds averaging around $3,700+, up from roughly $3,200 previously, with the number of refunds also rising. ^[14]
A MarketWatch analysis, echoed on Morningstar and Yahoo, says the typical refund could be about $1,000 larger, boosting the average refund to roughly $3,800 per filer. ^[15]
Investment bank Piper Sandler projects roughly $91 billion more in total refunds, which works out to roughly an extra $1,000 per person for many filers. ^[16]

Republican leaders on Capitol Hill have embraced these numbers, with the House Ways and Means Committee touting 2026 as potentially the largest tax refund season in U.S. history. ^[17]

Trump’s promise: “Largest tax refund season ever”

At a Cabinet meeting this week, President Donald Trump said that American taxpayers are “in line for record tax refunds” when the upcoming filing season opens. He predicted that “next year’s [is] projected to be the largest tax refund season ever,” crediting OBBBA’s tax cuts and new deductions. ^[18]

Treasury Secretary Scott Bessent echoed the message, saying that with many OBBBA provisions retroactive to 2025, the U.S. will see “very substantial tax refunds” in the first quarter of 2026. He highlighted tax relief for: ^[19]

Social Security beneficiaries
Tipped workers
People earning overtime
Borrowers paying interest on qualifying U.S.-made car loans

Conservative groups like Americans for Tax Reform have branded OBBBA a “big, beautiful success story,” arguing that the retroactive tax cuts combined with unchanged withholding are what will deliver the “largest tax refund season in history.” ^[20]

Inflation and Affordability: Economists Worry About a Hidden Stimulus

While larger refunds sound like unambiguous good news, economists are divided about the broader economic impact.

A stimulus check in disguise?

Analysts quoted in Yahoo Finance and summarized by IndexBox warn that the refund surge will act like a delayed, tax-based stimulus hitting the economy in early 2026: ^[21]

David Kelly, chief global strategist at JPMorgan, has argued that “far too much” money is being withheld this year and that the resulting wave of refunds could boost spending much like the pandemic-era stimulus checks did—though likely more skewed toward middle- and upper‑income households.
David Kotok of Cumberland Advisors expects a “fiscal jolt,” warning that combining a refund surge with still‑loose monetary policy and possible Fed rate cuts could put renewed upward pressure on inflation.

Other experts counter that many households are under financial stress, and a lot of that money may go toward paying down credit card balances or replenishing savings, which would be less inflationary. MarketWatch notes that refunds have historically been used heavily to tackle consumer debt—now at over $1.2 trillion on credit cards alone. ^[22]

Americans still don’t feel “affordable”

Politically, the timing is fraught. New Washington Post reporting today says Trump is struggling to persuade voters that affordability concerns are overblown, despite touting larger refunds, lower gas and drug prices, and promises of tariff-funded “dividends” to households. ^[23]

Key points from current coverage:

A recent Post–ABC–Ipsos poll finds about 6 in 10 Americans disapprove of Trump’s handling of the economy, with affordability still the top concern. ^[24]
In a separate Post editorial published this morning, commentators argue that Republican leaders telling people to “relax” and wait for a coming boom isn’t resonating when consumers say they’re cutting holiday budgets and leaning more on “buy now, pay later” services. ^[25]
Manufacturing, agriculture and some consumer sectors are being squeezed by higher input costs from tariffs and policy uncertainty, adding to worries that refunds could temporarily mask deeper issues without solving them. ^[26]

In short, bigger refunds won’t automatically fix the affordability crisis—especially if prices for housing, healthcare, groceries and education keep grinding higher.

What the IRS Wants You to Do Before December 31, 2025

Even though filing season doesn’t open until late January, the choices you make this month will heavily influence your 2026 refund.

Here are the main year‑end action items, based on current IRS guidance and the nationwide notice.

1. Lock in a safe and fast refund method

Because paper checks are being phased out, the safest move is to:

Open a checking or savings account at a bank or credit union if you don’t have one.
Verify routing and account numbers with your bank, employer, and tax preparer.
Plan to include those details on your 2025 tax return for direct deposit.

The IRS and Taxpayer Advocate Service both emphasize that failing to provide direct deposit info could delay your refund by weeks and involve additional IRS correspondence. ^[27]

If you truly cannot access a bank, the IRS says there will be limited exceptions and alternative options like certain prepaid cards—but you may still face more friction and delays. ^[28]

2. Re‑check your withholding and consider updating Form W‑4

Because 2025 withholding tables were not updated for OBBBA, many employees are on track for oversized refunds in 2026. ^[29]

If you’d rather have more take‑home pay now and a smaller refund later, the IRS suggests:

Using the 2025 Deductions Worksheet and submitting a new 2025 Form W‑4 to your employer to reflect: ^[30]
- Expected tip and overtime deductions
- Anticipated car loan interest deduction
- Enhanced senior deduction (if applicable)
- Increased standard deduction and child tax credit
Or, if you don’t have those specialized deductions, using the Tax Withholding Estimator which already reflects the higher standard deduction and child tax credit.

If you adjust your withholding now, the IRS recommends revisiting it again in early 2026 as more guidance and updated tools roll out. ^[31]

If you like big refunds, you can of course leave withholding as-is—just remember that this is essentially an interest‑free loan to the government.

3. Track OBBBA‑eligible items carefully

To actually claim OBBBA’s new tax breaks, you’ll need good documentation:

Tips
- Keep a log of cash and card tips.
- Make sure tips are properly reported to your employer or disclosed on your tax return.
- Check whether your job is on the IRS’ list of “customarily and regularly tipped” occupations. ^[32]
Overtime
- Save pay stubs that clearly show your regular pay rate and overtime pay.
- The deduction generally applies to the “extra half” in time‑and‑a‑half required under federal labor law, and it must be reported to the IRS. ^[33]
Car loan interest
- Confirm your vehicle is a qualifying new, U.S.-assembled passenger vehicle purchased after December 31, 2024.
- Keep your sales contract and monthly statements showing interest paid. ^[34]
Seniors and families
- Gather proof of age, income and dependent information so you can use the enhanced senior deduction and child tax credit. ^[35]

Without this paper trail, it will be harder to substantiate the deductions if your return is questioned.

4. Get your general tax house in order

The standard year‑end advice still matters, especially in light of OBBBA:

Maximize retirement contributions while respecting new limits.
Consider timing income or deductions—where possible—to stay under OBBBA’s income phase‑outs for various deductions and the SALT cap. ^[36]
Double‑check estimated tax payments if you’re self‑employed or have significant non‑wage income.

Given the complexity of the new law, it’s reasonable to consult a trusted tax professional or financial adviser for personalized planning.

Who Gains the Most From Bigger Refunds—and Who Might Miss Out?

Current research suggests the benefits of the refund surge won’t be evenly distributed.

Likely winners

Middle‑income households who:
- Work in tipped or overtime-heavy jobs,
- Have children and qualify for the larger child tax credit, and
- Itemize and take advantage of the higher SALT cap. ^[37]
Some seniors, who get both a larger standard deduction and a new or enhanced senior‑specific deduction. ^[38]
Borrowers of qualifying new U.S.-made cars, thanks to the car loan interest deduction. ^[39]

Who may benefit less—or face new risks

Lower‑income households who don’t itemize and may not benefit from the higher SALT cap or may earn too little to fully use non‑refundable credits. ^[40]
Unbanked and underbanked taxpayers, older adults and some rural or disabled Americans, who may struggle with the rapid shift away from paper checks and online account requirements. ^[41]
People who depend heavily on programs facing cuts under OBBBA (such as SNAP, Medicaid and certain clean energy or education supports). Critics argue that for many households, higher tax refunds may not fully offset lost benefits or higher long‑term costs. ^[42]

How to Use a Bigger Refund Wisely

If you do end up with a larger 2026 refund, experts broadly suggest treating it as a chance to improve your financial resilience rather than an excuse for one‑time splurges—especially if inflation flares up again.

Common priorities include: ^[43]

Paying down high‑interest debt, particularly credit cards.
Building or topping up an emergency fund (three to six months of expenses is a common benchmark).
Boosting retirement savings or health savings accounts.
Investing in skills, education or certifications that can increase your earning power.

For big-ticket goals—like buying a home, replacing a car or funding college—consider coordinating your refund strategy with longer‑term planning rather than treating it as stand‑alone money.

Key Takeaways for Taxpayers on December 6, 2025

Yes, refunds are on track to be much bigger in 2026. Multiple independent analyses and the Trump administration itself expect an average bump of around $1,000 per filer thanks to OBBBA’s retroactive cuts and unchanged 2025 withholding tables. ^[44]
But you must be ready for the end of paper checks. Failing to provide direct deposit info or arrange a suitable electronic refund option could mean serious delays in getting your money. ^[45]
The “refund surge” carries risks for the wider economy. Economists warn it could act like a hidden stimulus, potentially fueling inflation at a time when many families already feel squeezed and political tensions over affordability are high. ^[46]
Your year‑end moves matter. Updating withholding, organizing documentation for new OBBBA deductions, and locking in direct deposit can make the difference between a smooth, fast refund and a stressful 2026 tax season.