Millions of Americans could be in for a welcome surprise when tax time rolls around in 2026. Thanks to legislative adjustments scheduled to kick in after 2025, the standard deduction could rise and several provisions from the Trump-era tax cuts are set to expire—potentially increasing average tax refunds. While some families and individuals may end up paying more in taxes overall, others—particularly middle- and lower-income households—could see bigger refunds depending on how the revised brackets and credits align with their earnings and deductions.
The United States tax code is on the verge of another dramatic change. Many of the provisions introduced by the Tax Cuts and Jobs Act (TCJA) of 2017 are set to sunset at the end of 2025 if Congress doesn’t act to extend them. This includes changes to tax brackets, the standard deduction, and popular tax credits. As a result, millions could experience a shift in their taxable income—and for some, that could mean receiving a larger refund in 2026.
Key changes impacting 2026 IRS tax refunds
| Factor | What’s Changing | Potential Impact |
|---|---|---|
| Tax Brackets | Reverting to pre-2017 levels | Higher-income earners may face higher rates |
| Standard Deduction | Expected to reduce from 2025 levels | Fewer taxpayers will benefit unless extensions occur |
| Child Tax Credit | Reduction from expanded TCJA amounts | Families with children may see smaller credits |
| Itemized Deductions | Restrictions on SALT, mortgage deduction may loosen | Itemizing becomes more beneficial for some households |
| Estate and Gift Taxes | Exemptions reduced from expanded TCJA levels | High-net-worth individuals may owe more |
What changed this year
The Tax Cuts and Jobs Act, signed into law in 2017, made sweeping changes to the tax code—many of which were set to expire in 2025 as a cost-saving measure. In 2026, several provisions are scheduled to sunset unless Congressional action extends them. This includes the compression of tax brackets, extra deductions, and expanded credits that provided relief across income levels.
Taxpayers could see increased refund sizes in 2026 because some of the previous tax incentives—like reintroducing personal exemptions and boosting the ability to itemize deductions—may enable more people to lower their taxable income more effectively compared to the current standard deduction-heavy design.
Who qualifies and why it matters
The size of a tax refund is governed primarily by how much tax a person or household owes versus how much they paid in during the year. With likely changes to the brackets and deductions, the equation that determines refunds will shift significantly. Households with more dependents or higher deductible expenses might qualify for greater reimbursements after years of benefiting less from itemization due to the high standard deduction.
At the same time, single filers and higher-income earners may end up with smaller refunds—or even owe more—if older, more progressive tax rates replace the currently compressed brackets. In effect, lower- and middle-income taxpayers, particularly those with children or mortgages, stand to benefit the most, while upper-bracket taxpayers may see modest losses or increased liabilities.
Winners and losers from these tax changes
| Group | Outcome | Why |
|---|---|---|
| Middle-income families with children | Winner | Potentially benefit from return of personal exemptions, improved itemization |
| Lower-income households | Winner | Larger earned income and child tax credits (if expanded) |
| High-income earners | Loser | Likely to face higher marginal tax rates and reduced estate tax exemption |
| Homeowners in high-tax states | Winner | SALT deduction may return without cap, increasing deductions |
| Couples without children | Neutral/Mixed | Depends on revised rate structure and available deductions |
How to prepare now for your 2026 tax return
Even though the changes won’t affect tax returns until the 2026 filing season (for the 2025 tax year), early preparation can help taxpayers benefit from the upcoming shift. Here’s what financial planners recommend starting now:
- Track deductible expenses such as mortgage interest, medical bills, and charitable donations in case they become more advantageous than the standard deduction again.
- Review your withholdings and estimated taxes with a tax advisor to ensure you’re not overpaying or underpaying under changing rates.
- Stay informed on Congressional developments that might extend or modify the TCJA provisions before they expire.
- Consider tax-advantaged vehicles like IRAs or HSAs to lower your taxable income before year-end, especially if marginal rates increase.
Will Congress act before 2026?
Whether these tax changes fully materialize depends heavily on political decisions between now and the end of 2025. Lawmakers may vote to extend certain provisions or overhaul pieces of the tax code entirely. The presidential and congressional elections in 2024 are likely to play a significant role in shaping the future of tax policy. If the current provisions lapse as scheduled, taxpayers can expect a return to pre-TCJA norms—higher top tax brackets, reduced standard deductions, and the reappearance of personal exemptions.
“If no legislative action is taken, many taxpayers are in for a surprise. In some cases, they’ll pay more, but in others—especially households with dependents—they could get significantly higher refunds.”
— Jordan Levy, Certified Public Accountant
Planning strategies to maximize your future refund
To increase the chances of receiving a larger tax refund in 2026, financial experts recommend adopting a few strategic tactics:
- Explore itemizing deductions again if the thresholds drop and limitations on deductions (like SALT) are eliminated.
- Adjust W-4 forms in 2025 according to the new tax brackets and eligibility to claim dependents.
- Utilize tax credits like the Earned Income Tax Credit (EITC) if you qualify and ensure you file every relevant schedule.
- File early and electronically using up-to-date software to ensure best access to the year’s credit calculations and refund tools.
Frequently asked questions about 2026 tax refunds
Will the standard deduction be lower in 2026?
Yes. If current law remains unchanged, the standard deduction will revert to pre-TCJA levels, which are significantly lower than current standards. This could lead many to consider itemizing again.
Could I pay more in taxes but still get a higher refund?
It’s possible. If your withholdings remain high and credits or deductions benefit you more under the revised rules, your refund could increase despite an overall tax hike.
Are personal exemptions coming back?
Personal exemptions were removed under the TCJA, but if it expires, they may return in 2026—offering another tool to reduce taxable income, especially for larger households.
How will high-income earners be affected?
They may face higher marginal tax rates, lower pass-through income deductions, and reduced estate tax exemptions—leading to lower refunds or increased liabilities.
Should I adjust my withholdings before 2026?
Yes. With changing brackets and deductions, it’s wise to check your W-4 withholding form in 2025 to make sure you’re not overpaying or underpaying based on your projected tax profile.
Will these changes happen automatically?
If Congress takes no action, yes—the changes will be automatic beginning with the 2025 tax year (filed in 2026). However, legislation could still delay, reverse, or extend them.
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