:max_bytes(150000):strip_icc()/GettyImages-1325243885-8a318388d8f045829e1cc4ee56243024.jpg "How the New Tax Bill Could Boost Your Refund Next Year")
:max_bytes(150000):strip_icc():format(jpeg)/GettyImages-1325243885-8a318388d8f045829e1cc4ee56243024.jpg)
Key Takeaways
- Some taxpayers, such as tipped workers or those earning overtime pay, could see larger refunds in 2026 because the new tax cuts apply retroactively to 2025.
- The IRS won’t adjust withholding rules until 2026, meaning some workers may overpay taxes in 2025 and could receive that money back as a refund.
- The One Big Beautiful Bill Act expands the child tax credit and standard deduction, but experts say many taxpayers won’t see a major change in their refunds.
Select taxpayers could receive larger tax refunds when they file their taxes in 2026 because of President Donald Trump’s recent tax law, the One Big Beautiful Bill Act (OBBBA).
Since some provisions in the law retroactively go into effect at the beginning of 2025, certain taxpayers—such as workers who receive tips or overtime pay and those who are eligible for the child tax credit—might get a bigger refund when they file next year.
This is because the IRS will wait until 2026 to make changes to some of the withholding rules that must be modified due to the new law.
“Taxpayers with significant income that qualifies for the new deductions, like tipped and overtime income, could see a substantial refund as the tax cut applies to 2025,” Alex Muresianu, a senior policy analyst at the Tax Foundation, a nonpartisan think tank, told Investopedia in an email. “But withholding has not changed to reflect that yet.”
Why This Matters To You
If you’re affected by some of the new deductions or expanded credits offered through the One Big Beautiful Bill Act, you might receive a larger refund next year. However, one expert notes that since the OBBBA merely extends many of the provisions laid out in Trump’s 2017 tax cuts, many taxpayers may not notice any changes.
Additionally, taxpayers who receive the expanded child tax credit and who take the standard deduction, may get a bigger tax refund, too. The OBBBA increased the child tax credit by $200 to $2,200 and the standard deduction by $750 to $15,750 for single-filers.
The law, which was signed by Trump in July 2025, extended, altered, and made permanent some provisions from his 2017 tax cuts, which had been set to expire in 2025. The law also implemented new rules like no tax on tips, no tax on overtime, no tax on car loan interest, as well as additional deductions for seniors.
Murseianu said that most taxpayers may not see a significant difference when they file their taxes in 2026.
“A relatively small percentage of taxpayers will qualify for those new deductions. [For example,] only around 2.5% of workers are tipped,” Murseianu said. “I think a lot of taxpayers will see less change than they might expect.”
