IRS Tax Refunds 2026: Millions of Families Set for Bigger Payouts This Year
It is a very taxing time of the year, pun intended, as the 2026 tax season goes on, millions of American households are preparing for what could be some of the most generous federal refunds in history.The Internal Revenue Service began accepting individual tax returns for tax year 2025 on 26 January 2026, which was the official start of the filing season. Now, with big tax law changes in effect, many families can expect lower taxable income and potentially larger refunds than in previous years. Important provisions include an expanded Child Tax Credit, higher standard deductions, and adjustments to other tax breaks that reduce the amount of income subject to tax.The result of these legislative changes and inflation-driven updates is anticipated to benefit a bunch of taxpayers, from working families and service industry employees to seniors and moderate-income earners. However, the timing of refunds can differ a lot depending on the credits claimed and how returns are filed, with statutory rules affecting when certain refunds can be issued.Bigger Credits and Higher Deductions Boost RefundsOne of the most important reasons many taxpayers are expecting larger refunds in 2026 is the suite of tax law changes that took effect for the 2025 tax year, which are seen in returns filed this year. At the centre of these changes is the enhanced Child Tax Credit. For 2025 returns, the maximum credit is $2,200 per qualifying child under 17, with up to $1,700 of that amount refundable. This is both an expansion over prior law and an automatic adjustment for inflation.Alongside the Child Tax Credit, the standard deduction has increased to $15,750 for single filers, $31,500 for couples filing jointly, and $23,625 for heads of household. These numbers show the IRS's annual inflation adjustments and are designed to protect more income from taxation. In addition, taxpayers aged 65 and over can claim a separate senior deduction of $6,000, further reducing taxable income for eligible retirees.
Another big change is to the Earned Income Tax Credit (EITC), a refundable credit aimed at supporting low- to moderate-income workers. For the 2026 filing season, the maximum EITC ranges from $664 for filers without children to $8,231 for those with three or more qualifying children. These amounts are a bit higher than for the previous tax year due to inflation adjustments. Taken together now, these expanded credits and deductions are expected to contribute to larger overall refunds for many families compared with past years.According to reports, average federal refunds this year could rise a lot compared with 2025, with some estimates suggesting they could be around $1,000 higher than last year's average for certain taxpayers. These projections are affected by the expanded child credit, enhanced standard deduction, and changes to withholding that left more money in workers' paycheques during the year.That said, not all taxpayers will see a large bump in their refund. Those with very high incomes or who are not eligible for major credits will see a more modest impact from the law changes. In addition, households that overpaid throughout the year may simply see a return to a more usual refund amount rather than a crazy increase.
When Refunds Arrive and Tips for FilingNow, understanding the timing of refunds is just as important as knowing how large they might be. The IRS generally issues refunds within 21 days of accepting a taxpayer's e-filed return that includes direct deposit instructions. This remains the fastest method to receive any refund. Paper returns and checks take much longer, and in some cases may not arrive for many weeks.However, statutory rules under the PATH Act mean that refunds claiming the Earned Income Tax Credit or the Additional Child Tax Credit cannot be issued before 2 March 2026, even if the return is accepted earlier. This requirement gives the IRS additional time to verify eligibility and combat fraud. As a result, many taxpayers who claim these refundable credits will not see their refunds until March or later, in all probability.
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