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By Suzanne Blake
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Americans are set to receive higher tax refunds this year, with refunds set to increase an average of $1,000 per household due to President Donald Trump’s Working Families Tax Cuts, the Treasury Department said.
The exact refund you receive will depend on your specific circumstances, but financial experts say middle- and upper-income households will likely benefit the most.
Why It Matters
The Trump administration has ushered in a wave of tax changes that will cause significant updates to what Americans owe and potentially how large their tax refund is.
Read More on Personal Finance
More than 100 million households are set to receive a refund. For American families with two children, the average tax cut will be $1,700 because of the enhanced child tax credit.
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What To Know
What are the Working Families Tax Cuts?
The Working Families Tax Cuts is an encompassing term for the new tax breaks signed into law on July 4 of last year as part of the larger legislative package, the One Big Beautiful Bill.
These changes were designed to provide tax relief to workers, families, seniors, and small businesses, with many provisions retroactive to the beginning of the 2025 tax year.
“I think we are going to see distinct groups of winners based on distinct provisions in the OBBBA,” Drew Powers, the founder of Illinois-based Powers Financial Group, told Newsweek.
Here's what's included in the Working Family Tax cuts:
Child Tax Credit Increase
The child tax credit for tax year 2025 increased to $2,200 and was adjusted for inflation, and the standard deduction doubled, impacting roughly 90 percent of American taxpayers, the Treasury said.
"Lower-income families with children will enjoy the boost in the Child Tax Credit and Earned Income Tax Credit," Powers told Newsweek.
No Tax on Tips, Overtime
Many other Americans will benefit from the new rules on taxes for tips and overtime.
Refund increases will also be especially large for Americans whose income primarily comes from tips or overtime because the new law makes both categories tax‑free up to certain thresholds.
This includes no tax on tips up to $25,000 and no tax on overtime up to $12,500 (or $25,000 for joint filers).
"Lower-income workers in tipped professionals will enjoy the Tips Tax Deduction, but they need to be warned that deducting tips will also lower income for the Child Tax and Earned Income Credits," Powers told Newsweek.
SALT Cap Increase
However, middle‑ and upper‑middle‑income earners who make between $60,000 and $400,000 will likely receive the biggest refund boosts due to the retroactive provisions of the One Big Beautiful Bill Act (OBBBA). These households benefit most from expanded deductions and the State and Local Tax (SALT) cap increase.
The SALT cap was raised from $10,000 to $40,000, especially helping residents in high‑tax states.
Homeowners in states like New York, New Jersey, California, Connecticut, and others with high property or income taxes will likely see major gains because the SALT deduction cap was raised dramatically.
Senior Deduction
Seniors also benefit due to an additional $6,000 senior deduction starting in 2026.
When Will Tax Refunds Be Issued?
Under the IRS’s typical schedule, e-filed returns with direct deposit are the fastest method to get your refund.
Most refunds are issued within 21 days of IRS acceptance, meaning you could see direct deposit about three weeks after acceptance if there are no issues
IRS Tax Refund Delays
Despite the typical IRS schedule, millions could face delays for their refunds as the agency deals with staffing shortages.
A Treasury watchdog report revealed the IRS started the 2026 filing season short-staffed, and workforce reductions could lead to delays.
In October of last year, the IRS let go of roughly 19,000 employees.
What People Are Saying
Drew Powers, the founder of Illinois-based Powers Financial Group, told Newsweek: “Businesses may be the biggest winners here. Small- to large-sized businesses may continue to enjoy the QBI, or Qualified Business Income Deduction, as well as the quite lucrative expansions of Bonus Depreciation and Section 179 Deduction limits. Smaller corporations will enjoy future tax-free sales of their companies due to the QSBS, or Qualified Small Business Stock exclusion. Larger companies will take advantage of the re-established R&D deductions and Section 163 (business interest) deductions.”
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: “The biggest refund increases are expected to go to working and middle-income households, particularly from some families benefiting from the larger Child Tax Credit and expanded standard deduction… However, it's still important not to overestimate the effects of these refund boosts until you've actually completed your return. For some, the boost will be significant and for others, it may be underwhelming.”
What Happens Next
While individual Americans may gain more purchasing power as a result of the higher tax refunds, the country’s national debt continues to grow, experts caution.
“At the end of all of this is our ballooning national debt, which seems to grow regardless of which party is in power,” Powers said. “We need to find a better balance of spending and taxation. Attacking just one side of the equation is never enough.”
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