Tax Refunds Jump 10.2% This Year
The average IRS tax refund is up 10.2% so far this filing season, rising to $3,213 from $2,916 last year based on early returns. Americans plan to use these bigger refunds strategically — 39% for paying down debt, 33% for building savings, and 26% for essential expenses. Only 9% plan to invest their refund, presenting an opportunity for better wealth-building guidance.
The larger refunds this year are primarily a result of the "One Big Beautiful Bill Act" (OBBBA) signed into law in July 2025. This legislation introduced several tax cuts, but the IRS did not update the 2025 tax withholding tables to reflect these changes. This means many taxpayers had more tax than necessary withheld from their paychecks throughout the year, resulting in a larger refund now. Key provisions of the OBBBA impacting refunds include an increased Child Tax Credit, which rose by $200 to $2,200 per child for the 2025 tax year. Additionally, a new deduction was introduced for seniors aged 65 and older, allowing them to deduct an extra $6,000. Middle-income households, particularly those earning between $50,000 and $150,000, are expected to see the most significant benefit from these changes. New deductions for up to $25,000 in tip income and some overtime pay are also contributing to larger refunds for eligible workers. Furthermore, the cap on the state and local tax (SALT) deduction was temporarily raised from $10,000 to $40,000 for many households, which could lead to substantial tax savings for those who itemize. While the average refund is up, the pace of filing and processing is slightly behind last year. As of February 13, 2026, the IRS had received 32.2 million returns, a 2.6% decrease from the same period in 2025, and had processed 31.8 million, down 3.1%. This filing season is also marked by significant challenges for the IRS. The agency is operating with a reduced workforce, which watchdogs warn could lead to delays in processing, especially for returns that require manual review. The National Taxpayer Advocate has cautioned that while most filings should go smoothly, those with issues may face longer waits for assistance. The slower filing rate could be due to several factors, including taxpayer hesitation or administrative delays in the availability of some forms. Experts note that mid-February is often a peak time for filing, which can lead to processing bottlenecks, particularly if returns have missing or mismatched information. The full picture of this year's refunds will become clearer as the April 15th filing deadline approaches. The initial figures do not include millions of returns from taxpayers who claim the Earned Income Tax Credit or the Additional Child Tax Credit, as by law, those refunds cannot be issued before mid-February. Visits to the IRS website have surged by 42% compared to last year, suggesting that many taxpayers are actively seeking information about the new tax changes and the status of their refunds. The IRS encourages the use of its "Where's My Refund?" tool for the most up-to-date information.
