White House Press Secretary Karoline Leavitt indicated during a press conference that Americans could experience a significant increase in their tax returns next spring. This projection comes amid what is anticipated to be a record-breaking tax season. The statement has generated anticipation regarding the direct impact on taxpayers’ finances.
The analysis behind this claim comes from the investment banking firm Piper Sandler. This study predicts that taxpayers could expect to receive approximately $1,000 more in their tax refunds during 2026. In aggregate terms, the firm estimates that total refunds could exceed $91 billion in additional refunds for that tax year.
The current administration directly links this economic projection to the implementation of the “One Big Beautiful Bill Act,” (OBBBA) a bill signed by President Donald Trump in July. This legislation introduces a series of changes to the tax code, including an increase in the standard deduction and the creation of various tax exemptions.
Your Tax Return Could Change Forever Next Year
The aforementioned regulations include provisions affecting income such as tips and overtime pay, as well as car loan interest, among other items. The scope of these changes is broad and aims to alter the tax burden for a significant segment of the population. Their design was debated in the legislature before their enactment.
A critical factor that could boost projected refunds is the retroactive nature of several of the changes stipulated in the law. Many of these amendments are set to take effect from the beginning of 2025. This means they will apply to the tax year that taxpayers will file in 2026.
This retroactive effect creates a scenario where income already received during 2025 will be reevaluated under the new tax parameters. Consequently, the final calculation of the tax liability, compared to the tax withheld from payroll during that year, would show a discrepancy in favor of the taxpayer.
Prepare for the Record-Breaking 2026 Tax Season
However, there is a procedural element that could determine whether these projections materialize into massive refunds. The IRS issued a statement in August indicating that it will not update tax forms or withholding tables for 2025. These documents are essential for employers to calculate the exact amount of tax to withhold from each paycheck.
Without updating these tables, the withholding system would continue to operate under the previous tax regulations. Don Schneider, an economist at Piper Sandler, analyzed this situation on the podcast “Talking Taxes In a Truck.” Schneider explained the dynamics that would arise between the new law and the outdated withholding system.
Schneider noted that, since most taxpayers won’t adjust their tax documents to reflect the retroactive changes, “Actually, when people do go to file, I think they’re going to be surprised by some really, really big refunds.” This systematic under-withholding throughout the tax year would, in effect, create an overpayment that would be refunded upon filing.
Tax Cut or Bigger Refund? The Key Question
A separate analysis by J.P. Morgan reached a similar conclusion, supporting Piper Sandler’s projection. The J.P. Morgan report concluded that “too much money will have been withheld from taxpayers and refunds will increase in early 2026.” The agreement between two major financial institutions lends credibility to the potential scenario.
However, the same economist from Piper Sandler introduces a nuance of uncertainty regarding how taxpayers will ultimately receive the benefit. Schneider states that it is not a given that taxpayers will see the full amount of that tax relief as a refund this spring.
“This could be one of the biggest refund seasons in history,” he said. “But, of course, there’s a question: Do you receive these benefits as a refund, or do you simply receive a significant reduction in the tax burden that was otherwise positive when you file your return?” This question underscores the difference between a large refund and a smaller tax liability.
