Many Americans may receive more tax refunds in 2026 thanks to the changes brought about by the “One Big Beautiful Bill Act” proposed by President Trump. Trump signed this bill into law in July of last year. The large-scale tax cuts and spending bill includes several retroactive changes applicable to the 2025 tax adjustments, which will impact tax filings submitted in 2026.
However, the Internal Revenue Service (IRS) has not updated the withholding tables used by employers, which determine how much tax is deducted from an employee’s salary. Therefore, the 2025 employee withholding amounts are still calculated based on the tax amounts owed before Trump’s tax cut measures were introduced.
Experts point out that your tax refund or amount owed depends on which new provisions apply to you and how much tax you paid through withholding or estimated payments in 2025.
For 2025 income, the “One Big Beautiful Bill Act” raises the standard deduction amounts, with $15,750 for single filers and $31,500 for married couples filing jointly, affecting a majority of taxpayers. Previously, these two standard deductions were $15,000 and $30,000, respectively.
Many families may also receive higher child tax credits. For 2025 income, the maximum tax credit for families meeting full exemption criteria has increased from $2,000 to $2,200.
The new $6,000 elderly deduction provided for individuals aged 65 and older will benefit many elderly Americans from 2025 to 2028. A full deduction can be enjoyed when the modified adjusted gross income (MAGI) does not exceed $75,000 ($150,000 for married couples filing jointly).
The “One Big Beautiful Bill Act” also introduces temporary tax relief for smaller groups of taxpayers, including tax breaks for tips, overtime pay, car loan interest, and increased state and local tax (SALT) deduction limits.
According to IRS estimates, approximately six million workers report tip income.
Data from the Peter G. Peterson Foundation shows that about six percent of workers nationwide reported overtime pay in 2024.
Andrew Lautz, Director of Tax Policy at the Bipartisan Policy Center (BPC), stated, “The largest portion of the increase in tax refunds we will see actually comes from the higher limits on state and local tax deductions.”
For 2025 income, the cap on state and local tax deductions has been raised from $10,000 in 2024 to $40,000, covering state and local income taxes as well as property taxes. However, only when taxpayers choose to itemize deductions can they claim the SALT deduction. According to the latest IRS data, about 90% of taxpayers did not choose to itemize deductions when filing their taxes.
(Reference: CNBC)