Americans to See Biggest Tax Refund Increase as Extra $1,000 Expected

Tax changes under the Working Families Tax Cuts will provide relief to workers, families, seniors, and small businesses.

Published on Feb. 6, 2026

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Americans are set to receive higher tax refunds this year, with refunds set to increase an average of $1,000 per household due to President Donald Trump's Working Families Tax Cuts, the Treasury Department said. The exact refund will depend on individual circumstances, but middle- and upper-income households will likely benefit the most.

Why it matters

The Trump administration has ushered in a wave of tax changes that will cause significant updates to what Americans owe and potentially how large their tax refund is. More than 100 million households are set to receive a refund, with families with two children seeing an average tax cut of $1,700 due to the enhanced child tax credit.

The details

The Working Families Tax Cuts is an encompassing term for the new tax breaks signed into law on July 4 of last year as part of the larger legislative package, the One Big Beautiful Bill. These changes were designed to provide tax relief to workers, families, seniors, and small businesses, with many provisions retroactive to the beginning of the 2025 tax year. Key provisions include an increase in the child tax credit, no tax on tips up to $25,000 and no tax on overtime up to $12,500 (or $25,000 for joint filers), and an increase in the State and Local Tax (SALT) cap from $10,000 to $40,000, especially helping residents in high-tax states.

  • The Working Families Tax Cuts were signed into law on July 4 of last year.
  • The tax changes are retroactive to the beginning of the 2025 tax year.

The players

Drew Powers

The founder of Illinois-based Powers Financial Group.

Alex Beene

A financial literacy instructor for the University of Tennessee at Martin.

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What they’re saying

“I think we are going to see distinct groups of winners based on distinct provisions in the OBBBA.”

— Drew Powers, Founder, Powers Financial Group (Newsweek)

“The biggest refund increases are expected to go to working and middle-income households, particularly from some families benefiting from the larger Child Tax Credit and expanded standard deduction... However, it's still important not to overestimate the effects of these refund boosts until you've actually completed your return. For some, the boost will be significant and for others, it may be underwhelming.”

— Alex Beene, Financial Literacy Instructor, University of Tennessee at Martin (Newsweek)

What’s next

While individual Americans may gain more purchasing power as a result of the higher tax refunds, the country's national debt continues to grow, experts caution.

The takeaway

The Working Families Tax Cuts aim to provide broad tax relief, with the largest refund increases expected for middle- and upper-income households, as well as lower-income families with children and workers in tipped professions. However, the long-term impact on the national debt remains a concern.