Marina
If you’re gearing up for your tax refund next year, there’s a chance your check could be significantly larger than usual. The One Big Beautiful Bill Act (OBBBA) — the sweeping tax law signed into effect in July 2025 — contains multiple provisions that retroactively apply to the 2025 tax year and are expected to influence refunds when Americans file in 2026.
According to the Internal Revenue Service (IRS), withheld taxes and rates haven’t caught up yet, meaning many taxpayers could receive a refund bump when they file next year.
What Has Changed Under the One Big Beautiful Bill?
The One Big Beautiful Bill Act brings numerous tax‐law changes, many of which influence refunds or tax liabilities. Below are key items:
- The standard deduction for single filers is increased (for 2025 the amount is about $15,750) and further indexed for 2026.
- A new deduction for seniors aged 65+ gives up to $6,000 in additional deduction for tax years 2025–2028.
- For tax year 2026 and forward: expanded credits such as the Earned Income Tax Credit (EITC) maximum ~ $8,231 for qualifying taxpayers with 3+ kids.
- Because employers and payroll systems haven’t yet updated withholding tables to reflect many of these changes, more tax may have been withheld than required — leading to larger refunds.
Who’s Likely to Get the Larger Refunds?
Here’s a breakdown of the taxpayer groups most likely to benefit from the law’s changes and withholding delays:
| Taxpayer Group | What Changed for Them | Why They Might Get a Bigger Refund |
|---|---|---|
| Seniors (age 65+) | Additional deduction of up to $6,000 effective 2025‑28. | Their taxable income is reduced, increasing refund. |
| Tipped or overtime workers | Law treats tips / overtime income more favourably or via deductions. | Withholding may have been too high given new rules. |
| Homeowners / high‑tax‑state residents | Expanded state & local tax deduction caps (SALT) and itemisation changes. | Reduced tax liability means larger refund potential. |
| Families with children | Increased child tax credit, more favourable standard deduction. | More credits + less tax means higher refunds. |
Important Figures & Facts to Know
Here are the biggest numbers and facts to keep in mind:
| Item | Figure / Detail |
|---|---|
| Standard deduction (single filers) 2025 | ~$15,750 under new law. |
| Additional senior deduction (65+) | Up to $6,000 for tax years 2025‑2028. |
| Average refund reported | Previous average around $2,939 before changes. |
| Timing of change for withholding | Withholding tables not updated for many changes until 2026. |
| Effective date of many changes | Retroactive to tax year 2025, applicable when you file 2026. |
How to Prepare for Your 2026 Refund
- Check your withholding now – Since many payroll tables haven’t been adjusted to reflect OBBBA changes, you may be over‑withholding tax.
- Review your eligibility for the new deductions or credits – If you’re age 65+, receive tips/overtime, bought a car possibly eligible for new auto‑loan interest deduction, you may see differences.
- Consult a tax professional – Because many of these provisions are new and complex (for example the treatment of tips, overtime, auto loan interest), professional guidance could help you position your refund correctly.
- File early and electronically – The IRS advises many refunds for eligible taxpayers still process within traditional timelines, but changes could affect timing.
The One Big Beautiful Bill Act ushers in a wave of tax‑law updates that could increase many Americans’ refunds when the 2026 filing season opens. If you’re a senior, tipped or overtime worker, homeowner in a high‑tax state, or part of a family claiming new credits, you stand to benefit.
FAQs
Will everyone get a larger tax refund under this new law?
No. While many taxpayers will benefit from the law, the size of the refund depends on your specific situation—income, deductions, credits, employment type, withholding, and whether you filed correctly.
What if my employer’s payroll doesn’t reflect the new law yet?
That’s likely. Since the withholding tables haven’t fully been updated, you may still have had too much tax withheld through 2025.
When will I see the effect of these changes?
Most of the retroactive changes apply to tax year 2025 and will be reflected when you file taxes in 2026 (for incomes earned in 2025). Some withholding changes will take full effect with payroll systems in 2026.