Average Tax Refunds Surge 22% Amid Legislative Changes
By John Nada·Feb 13, 2026·5 min read
Average tax refunds are up 22% this season, reflecting potential changes from new tax legislation amid upcoming midterm elections.
The average tax refund for the 2026 season has increased by 22%, according to Treasury Secretary and acting IRS Commissioner Scott Bessent. This figure, reported during an appearance on CNBC's 'Squawk Box,' reflects early data from the current tax season, which began on January 26. However, the IRS has not yet published official filing statistics, leaving some uncertainty about the context behind Bessent's claim.
Tax policy experts caution that early data can be misleading. Andrew Lautz, director of tax policy for the Bipartisan Policy Center, pointed out that while the average refund figure is promising, it doesn't provide a complete picture. In 2025, for instance, the average refund for individual filers was $3,052 through mid-October, according to the IRS. This suggests that while the increase is notable, the overall context of the tax season still requires careful consideration. Early tax season statistics can often reflect a skewed perspective on the final results, particularly if the data is limited to a specific timeframe.
As the midterm elections approach, tax refund sizes have turned into a significant political topic. President Donald Trump has claimed that 2026 will be the 'largest tax refund season of all time,' citing new tax breaks introduced via his 'big beautiful bill.' This legislation, which added additional tax benefits for 2025, left paycheck withholdings unchanged, potentially leading to larger refunds for many taxpayers. However, experts like Garrett Watson from the Tax Foundation note that the impact will vary widely based on individual circumstances, such as which tax breaks apply to each taxpayer and their overall tax contributions throughout the year. The complexities of tax filing mean that not all taxpayers will experience the same benefits, and some may not see an increase in their refunds at all.
Filers should remain aware that larger refunds may also come with potential audit risks if key forms are missing. The IRS typically sees an increase in average refunds around mid-February, particularly for those eligible for the earned income tax credit or additional child tax credit. Historically, after this peak period, the average refund has seen a slight decline as the April 15 deadline approaches, indicating that taxpayers should not solely rely on early season statistics when planning their finances.
The implications of these changes could resonate throughout the financial system, especially as consumer spending patterns are influenced by tax returns. The uptick in expected refunds could provide a boost to consumer confidence and spending, a necessary factor in a K-shaped recovery. With many American households likely to receive larger refunds, there is potential for increased spending in the economy, which could help stimulate growth and support local businesses.
Tax policy changes, especially those tied to high-profile political agendas, often create significant ripple effects in the economy. As taxpayers navigate the new landscape this season, the variation in refund sizes could lead to differing levels of financial security and consumer behavior across demographics. The discussions surrounding tax refunds become even more crucial as they intersect with the broader economic recovery narrative, particularly in light of the ongoing K-shaped recovery, where the economic fortunes of different groups are diverging rather than converging.
In this context, understanding the nuances of tax policy changes, such as Trump's 'big beautiful bill,' is essential. This legislation aimed to provide additional tax breaks, which could result in larger refunds for many. However, it is critical for taxpayers to recognize the inherent variability in how these changes affect their individual tax situations. As Lautz pointed out, while the average refund may be higher, the actual amount received will depend on various factors, including how much was withheld throughout the year and the specific tax benefits applicable to each taxpayer.
Moreover, the political landscape will undoubtedly influence how these tax changes are perceived and utilized by voters. The upcoming midterm elections add an additional layer of complexity, as politicians and parties leverage the narrative surrounding tax refunds to garner support. This dynamic could shape not only voter sentiment but also the fiscal policies that are proposed in the future.
As the tax season unfolds, it is essential for filers to stay informed about their specific tax situations. Missing key forms or failing to properly report income could lead to complications, including audits, which may offset any benefits gained from larger refunds. The IRS is known to scrutinize returns more closely when refund amounts are significantly larger than expected, particularly for those claiming credits that can significantly increase refund amounts.
In addition, the timing of tax refunds can also play a crucial role in personal finance management. Many taxpayers rely on their refunds to cover essential expenses or to make significant purchases, and any delays in receiving these funds can create financial strain. Thus, understanding the expected timeline for refunds, especially for those who qualify for the earned income tax credit or additional child tax credit, is vital as the IRS begins to process returns.
Historically, tax season trends indicate that while average refunds may peak in mid-February, they typically decline slightly as the filing deadline approaches. This pattern holds implications for taxpayers who may need to adjust their financial strategies as they await their refunds. Budgeting and planning for expenditures based on expected tax refunds require careful consideration of these seasonal trends.
Ultimately, this tax season's developments could set the tone for broader economic dynamics leading up to the elections. Observers will be watching closely to see how these factors influence not just individual finances but also market sentiment as taxpayers navigate the new landscape. As economic conditions continue to evolve, the relationship between tax policy and consumer spending will remain a focal point for economists and policymakers alike.