The IRS began accepting the tax return for the 2025 tax year on 26 January 2026. This tax season, taxpayers can gain a larger refund due to the changes in tax law through the new bill and adjustments. Taxpayers filing the 2025 tax year return can learn about the larger refund here.
What will make tax refunds bigger in this tax season?
The 2026 tax season has begun, and it will run till 15 April 2026. This tax season involves many changes that could offer tax relief and tax breaks to taxpayers. This tax season is expected to offer larger refunds to taxpayers.
Last year, the average refund paid by the IRS to taxpayers was over $3000, while this year, the analyst says they can expect an increase of $500 or $1000 to the tax refund. The reason for the larger refund expectation in the 2026 tax season is as follows:
- The federal government introduced a new bill, One Big Beautiful Bill, this year, that has changed many tax provisions. The changes to the tax laws involve tax breaks, an increase in the child tax credit, and others that can help US citizens in saving tax and boost their tax refund.
- Another reason is that due to the changes introduced in July 2025, the working class whose taxes were withheld did not adjust to the changes, and their taxes were held as per the previous rules, so now, with the new changes, they can be in for larger refunds.
What are the changes made for the tax year 2025?
The federal government introduced many big changes to the tax laws, some would be implemented for the 2026 tax year, and some will affect the 2025 tax year. So, let’s see the new bill changes that could contribute to the larger refund:
- Standard deduction: The new bill increased the standard deduction by $750 for single filers and $1500 for married couples from the earlier adjustment for the 2025 tax year. Now, it is $15,750 for individuals, and $31,500 for married couples filing jointly.
- New Deductions: The government introduced the new deduction in the new bill that will be enacted for the 2025 tax year, such as:
- No tax on tips: The self-employed individuals and employees can claim a deduction on the qualified tips. The maximum deduction allowed on the qualified tips is $25,000, but it will phase out for taxpayers with gross income over $150,000 for single filers and $300,000 for joint filers.
- Deduction on overtime: The government introduced the deduction of $12,500 for single filers and $25,000 for joint filers on qualified overtime.
- Car loan interest: The government introduced the maximum annual deduction of $10,000 for the car loan interest you paid in the tax year. The deduction will phase out for taxpayers with gross income of $100,000 for single filers and $200,000 for joint filers.
- Additional deduction for seniors: The new bill introduces an additional deduction of $6000 per individual aged 65 or over with income less than $75,000 (for individuals) and $150,000 (for joint filers).
- The new bill increases the child tax credit to $2,200 for each qualified child, providing relief to taxpayers with qualified children.
What else can boost your tax refund?
Apart from the new changes introduced by the government and no update to the withheld taxes, you can expect your refund to boost from the following means:
- EITC: The Earned Income Tax Credit was adjusted in the 2025 inflation adjustment. The EITC credit will boost your refund as it comes along with your tax refund. For the 2025 tax year, the tax credit offers the highest payout of $8046 for three or more children and $649 for no qualifying children.
- ACTC: The additional child tax credit was not increased, but it can boost your refund, as it is the refundable portion of the CTC. The ACTC credit for the 2025 tax year remains at $1700.
- Education Credits: The Lifetime Learning Credit and American Opportunity Credit can help you in boosting the refund, as AOTC offers a $1000 refundable credit. The LLC offers 20% of the $10,000 eligible expenses, but it also has a phase-out limit.
What should you do to prepare for the bigger tax refund?
The 2026 tax season has just begun; if you still haven’t filed the return, you should keep the following things in mind to claim the larger tax refund:
- Check your withholding on the Form W-2 and check the refunds based on the tax changes.
- You should check your IRS online tax account and your previous tax records to check your credits and others.
- You should check all the new changes introduced in the bill and see if they are applicable to you to claim them on your tax return.
- The IRS has made an update on Form 1099-K that reports income from online marketplaces and payment apps; you should check it if it’s applicable to you.
The new tax season has begun; it’s time to meet your tax responsibility. However, the government has introduced tax breaks and many other changes that can help you receive more from a tax refund.