Trump promises “largest tax refund season of all time”: How Much Could You Get, and How to Prepare?

TradingKey - Following President Donald Trump’s signature legislation—the “One Big Beautiful Bill”—the United States is anticipated to experience its largest tax refund season in history during spring 2026.

In a prime-time address from the White House, President Trump confidently stated: “Next spring is projected to be the largest tax refund season of all time.” He added: “...that were really accomplished through our great Big, Beautiful Bill, perhaps the most sweeping legislation ever passed in Congress.””

“We wrapped 12 different bills up into one beautiful bill. That includes no tax on tips, no tax on overtime, and no tax on Social Security for our great seniors,” he explained in his speech. “Under these cuts, many families will be saving between $11,000 and $20,000 a year."

Kevin Hassett, Director of the National Economic Council—and widely regarded as a leading candidate for the next Federal Reserve Chair—highlighted that a new wave of tax refunds is imminent, crediting the timing of Trump’s “One Big Beautiful Bill”: “We didn't pass the Big Beautiful Bill until the middle of the summer, and so a lot of the tax changes which affect last year weren't in any tax forms that people filled out at the beginning of the year.”

“So we are going to see the biggest refund cycle ever in the history of America, and people are going to get massive refund checks,” Hassett emphasized.

However, which groups will genuinely benefit from this reform? How much can they expect to receive? And how should individuals prepare in advance to ensure they receive their full refund entitlement?

The following article systematically outlines the key changes and essential points—equipping you to grasp the full scope of the “largest refund season” ahead of the curve.

(Source: Freepik)

As the 2026 tax season approaches, taxpayers would be wise to begin preparations now. The "One Big Beautiful Bill" championed by the Trump administration will introduce significant adjustments to multiple federal individual income tax credits and deductions. These reforms include both new provisions and certain retroactive clauses applicable to your 2025 tax returns filed in 2026.

Below are key changes warranting close attention:

• Tax-Exempt Tips: Each taxpayer may exclude up to $25,000 in tip income from taxation. However, this exclusion phases out proportionally when Modified Adjusted Gross Income (MAGI) exceeds $150,000 ($300,000 for married joint filers).
• Tax-Exempt Overtime Pay: Taxpayers may exclude up to $12,500 in overtime wages. Similarly, this exclusion diminishes as individual or household income surpasses the aforementioned MAGI thresholds.
• Enhanced Child Tax Credit: Eligible families will receive up to $2,200 per child (increased from the previous $2,000 standard), with annual inflation adjustments.
• Expanded Senior Deduction (Applicable 2025–2028): Taxpayers aged 65+ qualify for an additional $6,000 deduction atop existing standards. This benefit phases out starting at $75,000 MAGI ($150,000 for joint filers).
• Partially Refundable Adoption Credit: Families adopting children may claim up to $5,000 in refundable credits, adjusted annually for inflation.
• Increased SALT Deduction Cap: For 2026–2029, the maximum state and local tax deduction will rise to $40,000, with annual inflation adjustments.
• Qualified Vehicle Loan Interest Deduction: Up to $10,000 annually in interest expenses may be deducted for loans used to purchase eligible vehicles. This benefit phases out at $100,000 MAGI ($200,000 for joint filers).
• New "Trump Child Savings Accounts": A newly established IRA-type account for children. If your child was born between January 1, 2025, and December 31, 2028, you may apply by submitting IRS Form 4547 with that year’s return. The federal government will deposit an initial $1,000 into qualifying newborn accounts.
• Clear Sunset for EV Credits: All electric vehicle tax credits will terminate on September 30, 2025. Prospective buyers should note this deadline.
• Higher Standard Deductions (Effective for 2025 Tax Year): Single filers: $15,750; Head of household: $23,625; Married filing jointly: $31,500

Pay special attention: the changes above do not apply equally to all taxpayers. Different industries, household compositions, and income sources and levels will determine your eligibility and the magnitude of tax refund benefits you may receive.

Therefore, before planning your next tax filing, we strongly recommend thoroughly evaluating your personal financial composition and consulting tax professionals to maximize potential benefits within the bill.

1. Verify Personal Information and Deduction Eligibility

Ensuring accurate baseline data is the first step to efficient tax filing. Review the newly enacted bill’s provisions to confirm if you qualify for any of these benefits:

• Have minor children? Verify dependent details and ensure identity documents are complete.
• Age 65 or older? Note the newly added senior-specific deduction.
• Recently purchased a vehicle? Collect loan contracts and manufacturing origin proofs to claim vehicle interest deductions.
• Tip-dependent earners (e.g., servers, nail technicians): Maintain daily tip income records for tax reporting.

Additionally, use the IRS’s official Tax Withholding Estimator tool on its website. Input the latest policy updates to forecast preliminary refund amounts—helping you calculate payable/refundable sums early and avoid year-end "surprise tax bills."

2. Update W-4 Form Data for Income or Household Changes

Form W-4 is the critical document employers use to determine federal income tax withholding rates. If you married, had children, changed jobs, added side gigs, or earned capital gains in 2025, promptly submit an updated W-4 to your employer.

Failing to adjust your W-4 may lead to two scenarios:

① Insufficient withholding: Risking no refund—or even penalties for underpayment.

② Excessive withholding: Freezing monthly disposable income as "delayed refunds."

Proactively aligning this form with your current situation is essential for cash flow management and avoiding unnecessary losses.

3. Organize Required Documentation

Claiming credits and deductions typically requires supporting documents, such as:

• Childcare/tutoring expense invoices
• Auto loan interest statements
• Daily tip logs or app payment screenshots for service workers

Categorize these materials by deduction type and store backups on trusted platforms for quick submission during tax season.

(Source: Freepik)

If you do receive a substantial refund, how should you prudently allocate these funds?

• Allocate to Index Funds

For average investors, passively tracking the S&P 500 Index significantly outperforms market-timing strategies. This broadly diversified approach captures America’s long-term economic growth. For context: the S&P 500 has risen over 16% year-to-date, with a cumulative 84% gain over the past five years.

• Park Idle Cash in High-Yield Accounts

If you have no clear purpose for the funds temporarily, you may choose money storage platforms with better yield rates. Currently, some online banks and credit unions offer high-yield savings accounts (HYSA) or money market fund products whose annual percentage yield (APY) is performing well. One of the short-term stable wealth management tools.

Despite Trump’s claim that "some families will save $11,000 to $20,000" next filing season, policy details reveal broad benefits apply only to specific households—namely middle- to upper-middle-income families with children, multiple exemptions (tips/overtime), mortgages, or other deductible expenses.

Per Kiplinger, this may lift the 2026 average refund to $4,151—up from the IRS’s 2024 average of $3,151. However, securing $10,000+ refunds typically requires stacking multiple benefits: enhanced child credits plus tip/overtime exemptions plus auto loan interest deductions plus standard/senior combined deductions.

Crucially, not all taxpayers will meaningfully benefit. Multiple independent think tanks note the policy’s tilt toward higher earners. Bloomberg analysis highlights that taxpayers in high-cost states—California, New York, New Jersey—are primary beneficiaries, while low-wage workers below the tax-filing threshold see minimal impact.

The Congressional Budget Office (CBO) estimates the top 10% of earners would gain ~$12,000 annually in tax cuts under this framework, while the bottom 10% could face net losses of ~$1,600 due to reduced Medicaid and SNAP benefits. Piper Sandler’s October 31 report similarly projects middle/high-income filers will benefit most, with negligible gains for low-income non-filers.

Certified Financial Planner Brewer advises: “What I am telling my clients is that if they receive a larger refund than prior years then it will be a pleasant surprise, but don’t spend in anticipation of a large refund just yet.”

At the same time, it must be rationally recognized that the new bill still carries uncertainty.

The legislation faces significant Senate skepticism. Critics argue it funds tax cuts by slashing Medicaid, SNAP, and other social programs, potentially widening the deficit. Key provisions may be amended or delayed before final passage.