Tax filing season is in full swing, and while preparing your taxes often comes with stress, misplaced documents, and worries about filing correctly, there may be a silver lining this year. Many Americans may see larger refunds in 2026 as a result of Trump’s 2025 One Big Beautiful Bill legislation, analysts say.
Last year the average refund was $3,167, but with a number of new changes and deductions, experts say many Americans want to get another $1,000 or more back. In total, that could mean about an additional $90 billion in tax returns.
Here are the biggest changes that could boost your tax refund this year:
No tax on overtime
One of the biggest changes hitting tax filers this year is that overtime will not be taxed. Under the newly signed legislation, there is now a deduction of up to $12,500 in eligible overtime wages. According to the Center for Tax Policy, the law will provide an average tax cut of $1,400. The change applies from this year until 2028.
Larger child tax credit
One change many Americans will see on their tax returns this year is an increase in the Child Tax Credit (CTC). The credit goes from $2,000 per child (under 17 at the end of last year) to $2,200 per child (from $2,000). The credit is being phased out for married couples filing jointly with an adjusted gross income (AGI) over $400,000 and $200,000 for single filers.
A new senior citizen’s deduction
This year, those over 65 will receive a new senior deduction of $6,000 ($12,000 for married couples filing jointly). The temporary deduction is available for the period 2025–2028, but income limits apply. The deduction only applies to people making less than $75,000 ($150,000 for married couples).
No tax on tips
Tips are also not taxed this year, although there are restrictions based on income, occupation, and type of work. Still, those who rely on tips, such as servers, drivers and more, can deduct up to $25,000 from their taxable income. The benefit does not apply to anyone with an adjusted gross income (MAGI) over $150,000 (or $300,000 for couples). The deduction expires after 2028/
Change to standard deduction
There will also be a change to the standard deduction this year. For individual taxpayers, the contribution is $15,750 and $31,500 for joint filers. For heads of household, the standard deduction is $23,625. Overall, the new deductions represent a 7.9% increase over last year.
Change in state and local (SALT) deductions
The SALT deduction, which allows taxpayers to deduct state and local income/sales and property taxes from their federal taxes up to a certain limit, will see a temporary increase in the cap. For the 2025 tax year, the deduction will increase from $10,000 to $40,000. For high-tax countries, this could make a huge dent in overall deductions.
But when it comes to this particular commitment, most people won’t see the benefit at all. That’s because most people don’t earn enough to itemize deductions and are better off with the standard deduction. Those in the 1% to 5% income bracket are expected to receive the biggest benefit from the change.
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