Economy

Tax filing season opens with expectations of larger refunds amid legislative changes

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Jan 27, 2026

THE BARE STORY

The 2026 tax filing season officially began on January 26, with the Internal Revenue Service (IRS) expecting to receive approximately 164 million individual returns by the April 15 deadline. According to the agency, taxpayers who file electronically can typically expect to receive refunds in less than 21 days. However, the IRS noted that returns claiming the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) are legally required to be held for fraud screening, meaning those refunds will not be issued until March 2 at the earliest.

Experts and financial analysts project that many filers could see larger refunds this year following 2025 tax legislation enacted under President Donald Trump. Key changes affecting 2025 returns include an increase in the standard deduction to $15,750 for single filers and $31,500 for married couples filing jointly. The legislation also raised the maximum Child Tax Credit to $2,200 and introduced a new $6,000 deduction for eligible seniors. Additionally, homeowners may see impacts from an expanded state and local tax (SALT) deduction.

Andrew Lautz, director of tax policy for the Bipartisan Policy Center, attributed the potential for higher refunds to the new tax cuts and the fact that the IRS did not update employer withholding tables after the laws were passed. An analysis by financial services company Piper Sandler projected that the average refund could rise by roughly $1,000 from last year's average, which was approximately $3,000 to $3,200.

While the IRS encourages electronic filing and direct deposit—noting that it began phasing out paper refund checks late last year—some observers have raised concerns about processing capacity. Janet Holtzblatt, a senior fellow at the Urban-Brookings Tax Policy Center, warned that taxpayers could face service issues and delays due to previous IRS employee cuts and the effects of a federal shutdown. The IRS did not immediately comment on those specific concerns.

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Perspective by Claude

• Recent legislation significantly expands tax deductions and credits. Key changes enacted for the 2025 tax year include an increase in the standard deduction to $15,750 for singles and $31,500 for married couples, as well as a raised maximum Child Tax Credit of $2,200. The legislation also introduced a new $6,000 deduction for eligible seniors and expanded the state and local tax (SALT) deduction for homeowners.

• Analysts anticipate a substantial rise in the average refund amount. Projections from financial services firm Piper Sandler suggest that the average refund could increase by approximately $1,000 compared to the previous year’s average of $3,000 to $3,200. Andrew Lautz of the Bipartisan Policy Center noted that these higher potential refunds are driven by the new tax cuts combined with the fact that employer withholding tables were not updated after the laws passed.

• Electronic filing is expected to result in rapid reimbursement for most. The IRS has stated that taxpayers who choose to file electronically and utilize direct deposit can generally expect to receive their refunds in less than 21 days. The agency is encouraging this method as the filing season begins, with expectations of processing around 164 million individual returns.

How it may affect me

As a U.S. reader: You could receive a refund averaging $1,000 more than last year due to higher standard deductions, increased credits, and the fact that employer withholding tables were not updated.

If you claim the Earned Income or Additional Child Tax Credits, you must wait until at least March 2 to receive your refund due to mandatory fraud screenings.

You may encounter processing delays or difficulty accessing IRS support services this season resulting from previous agency staffing reductions and the lingering effects of a federal shutdown.

You should prepare to file electronically and use direct deposit to ensure timely payment, as the IRS began phasing out paper refund checks late last year.

Eligible seniors and homeowners may qualify for reduced tax liability through a newly introduced $6,000 deduction for older adults and an expanded state and local tax deduction.

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