The upcoming 2026 tax season could bring a welcome surprise to millions of American taxpayers: **bigger IRS tax refunds**. The reason? Several key adjustments to the federal tax system are on the horizon, some mandated by earlier legislation and others prompted by economic conditions like inflation. These changes aim to ensure that the tax code remains fair, relevant, and reflective of the cost of living. For certain individuals and families, that could mean more money in their pockets come refund time.
While large-scale tax changes often create confusion, they can also create opportunity. Understanding what’s shifting and who stands to benefit is critical if you want to maximize your return or reduce what you owe. From expanded tax brackets to potential updates in credits and deductions, the IRS is preparing to implement reforms that could result in **meaningful financial impacts** for millions of Americans.
2026 IRS refund changes overview
| Change Type | Details |
|---|---|
| Tax Bracket Adjustments | New, wider tax brackets could accommodate inflation |
| Standard Deduction | Likely to be adjusted upward due to inflation indexes |
| Child Tax Credit (CTC) | Possible expansion or restoration of enhanced credits |
| Earned Income Tax Credit (EITC) | Increased eligibility and larger maximum credit |
| Estate and Gift Tax Exemption | Potential rollback to pre-2018 levels unless extended by Congress |
What changed this year
Much of the anticipated change revolves around the expiration of provisions from the **Tax Cuts and Jobs Act (TCJA)** of 2017. As it stands, many of the TCJA provisions are slated to sunset at the end of 2025. If Congress does not act to extend them, the tax environment of 2026 may look quite different. This includes a return to pre-2018 tax rates and bracket structures, significantly smaller standard deductions, and altered credit qualifications.
The IRS, however, adjusts its tax code every year in response to inflation, among other things. With persistent price increases across various economic sectors, the **IRS inflation indexing** adjustments in 2026 are expected to be larger than usual. These changes, in turn, could influence how income is taxed and how credits are calculated — resulting in larger refunds for many.
Who qualifies and why it matters
The households most likely to benefit fall into a few broad categories. First are those in **lower- to middle-income brackets**, especially families with dependents. Why? Because credits like the **Child Tax Credit (CTC)** and **Earned Income Tax Credit (EITC)** directly reduce your tax liability — or even result in refunds if the credit exceeds taxes owed. Second are those whose income falls just within the higher end of a tax bracket — they may find themselves in a lower bracket after inflation-adjusted boundaries are implemented.
Seniors, single parents, and individuals claiming **head-of-household** status are also poised to benefit. If the standard deduction increases, it reduces taxable income for these filers. That will be particularly helpful for those who don’t itemize their deductions. Additionally, if the CTC is enhanced or made refundable again for all dependents, millions of families could see refunds not seen since 2021.
Winners and losers of the 2026 refund changes
| Winners | Losers |
|---|---|
| Low-to-mid-income families with children | High-income earners losing temporary TCJA tax breaks |
| Single filers and heads of household | Estate owners if estate tax exemption rolls back |
| Earned income filers claiming EITC | Taxpayers in brackets that revert to pre-2018 rates |
| Retirees with modest income | Business owners seeing loss of deductions |
How inflation affects tax refunds
Each year, the IRS calculates cost-of-living adjustments that affect more than 60 tax provisions. In years where inflation is high, these adjustments are more substantial. Key thresholds like the **standard deduction**, **tax brackets**, and **income limits for credits** are all indexed for inflation. That means you can earn more money before you’re pushed into a higher tax bracket — effectively lowering the percentage of taxes owed compared to the previous year.
In 2026, greater-than-expected inflation from prior years is likely to result in historically high threshold increases. As a result, many taxpayers could find themselves eligible for deductions and credits they weren’t previously able to claim — or able to claim enhanced amounts of them. This is a win for refund sizes.
Changes to credits and deductions
Credits like the **Child Tax Credit** and **Earned Income Tax Credit** are likely to see key changes in 2026, depending on how the landscape develops legally and economically. For instance, current versions of the CTC provide up to $2,000 per qualifying child and are partially refundable. However, if Congress reauthorizes elements from the American Rescue Plan Act of 2021, this could increase up to $3,600 and be made fully refundable again.
The **standard deduction** is another area under discussion. Unless TCJA benefits are extended, the standard deduction is scheduled to shrink. In 2023, it was $13,850 for single filers and $27,700 for joint — much higher than pre-2018 levels. If it reverts in 2025, refunds for those who don’t itemize may decrease, not increase. Taxpayers should prepare accordingly by monitoring tax proposals and planning early.
Importance of proper tax planning
Taxpayers stand to gain the most refunds when they plan ahead. With changes looming, it’s critical to assess your current filing strategy and understand how new rules may affect your refund or liability in 2026. Use tools like income calculators and tax forecasting software to get a preview of your financial situation under different tax scenarios.
Consulting a **tax advisor or CPA** well ahead of the 2026 tax season is more important than ever. From adjusting withholdings to maximizing available credits, there are many strategies you can implement now to ensure you position yourself for a refund — rather than a tax bill — down the line.
We always advise clients to keep a close eye on adjustments announced by the IRS each year because those numbers directly impact your tax bracket, deductions, and credits. Planning with even a year in advance can mean the difference between owing and getting money back.
— Janice Wallace, Certified Tax Planner
What to expect from Congress in 2025
Much of what will happen with 2026 refunds depends on congressional action in 2025. Lawmakers will have to decide whether to extend TCJA provisions or allow them to expire. In doing so, they’ll shape how deductions, credits, estate tax thresholds, and tax brackets are structured.
If legislation passes to preserve the existing savings and credits, refunds may increase even more substantially for those already positioned to benefit from inflation adjustments. If not, we may see a return to higher burdens for key taxpayer segments. Either way, heightened political focus will be on tax policy in the next election year.
Short FAQs about 2026 IRS tax refund changes
Will my 2026 tax refund be bigger than last year?
Possibly. Inflation adjustments and potential legal changes may increase deductions and credit amounts, especially for low- to middle-income taxpayers.
What is the main reason refunds could grow in 2026?
Inflation indexing and expiring tax laws could change brackets, increase deductions, and expand credit eligibility, all of which may result in larger refunds.
Are all families eligible for a larger refund?
No. Eligibility largely depends on income, number of dependents, and whether current laws are extended or allowed to expire.
What happens if the TCJA provisions expire?
We could see smaller standard deductions and a reversion to older tax rates, which may result in smaller refunds or higher tax bills for some.
How are inflation adjustments calculated by the IRS?
They’re based on the Chained Consumer Price Index (C-CPI), which reflects cost-of-living changes more accurately than old methods.
Should I modify my tax withholdings in 2025?
Yes, especially if you’re anticipating changes in income or tax law. Adjusting withholdings can help stabilize your refund or payment amounts.
Can seniors and retirees expect larger refunds?
Possibly. If standard deductions rise and income remains steady, older taxpayers may benefit from increased refund potential.
Where can I find updates on future IRS changes?
Check IRS press releases and consult a tax advisor regularly to stay up to date on evolving tax policies and thresholds.
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