2026 Tax Changes Bring Bigger Deductions, Larger Refunds

Experts say new tax provisions could mean an average $610 tax cut and $3,800 refund for Americans this filing season.

Jan. 30, 2026 at 2:31pm

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The 2026 tax filing season is underway, and major changes approved by Congress last year could mean larger refunds for many Americans, according to consumer expert Herb Weisbaum. The adjustments include an expanded standard deduction, new deductions for overtime pay, tipped workers, and new car loans, as well as a substantial increase in the state and local tax (SALT) deduction cap. Weisbaum urged taxpayers to file electronically to receive refunds quickly, but cautioned that a large refund is not necessarily a financial win.

Why it matters

These tax changes are aimed at providing more financial relief to Americans, especially those who have been hit hard by the economic impacts of the pandemic. The expanded deductions and increased refunds could help boost consumer spending and economic recovery in the coming year.

The details

The key changes include a 5% increase in the standard deduction beyond inflation, new deductions for overtime pay (up to $12,500 for individuals or $25,000 for joint filers), tipped workers (up to $25,000 in qualified cash tips), and new car loans (up to $10,000 in interest), as well as a substantial increase in the state and local tax (SALT) deduction cap (up to $40,000 for single filers and married couples who itemize). The Tax Foundation estimates these changes will result in an average tax cut of about $610 and increase the average refund to roughly $3,800.

  • The 2026 tax filing season is underway.
  • The new tax provisions took effect on January 1, 2026, but some apply retroactively to the 2025 tax return due April 15, 2026.

The players

Herb Weisbaum

A consumer expert and contributing editor at Checkbook.org who provided guidance on the 2026 tax changes.

The Tax Foundation

An independent tax policy nonprofit organization that estimated the impact of the 2026 tax changes.

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What they’re saying

“But this year — yeah, enjoy.”

— Herb Weisbaum, Contributing Editor, Checkbook.org (mynorthwest.com)

“This is going to be huge for a lot of people who make overtime pay.”

— Herb Weisbaum, Contributing Editor, Checkbook.org (mynorthwest.com)

“If that's how much money you're getting back, that's a loan for free that you gave to Uncle Sam.”

— Herb Weisbaum, Contributing Editor, Checkbook.org (mynorthwest.com)

What’s next

Taxpayers are encouraged to file their 2026 tax returns electronically to receive refunds quickly, within 21 days. The IRS will no longer issue paper checks, and refunds must be directly deposited.

The takeaway

The 2026 tax changes are designed to provide more financial relief to Americans, especially those impacted by the pandemic, through expanded deductions and increased refunds. However, taxpayers should be mindful that a large refund is not necessarily a financial win, and adjusting withholding could give them access to more of their income throughout the year.