Scott Bessent expects ‘gigantic’ tax refund year for American households
US Taxpayers May Get Bigger Refunds Next Year as Trump’s Tax Cuts Kick In
Treasury Secretary Scott Bessent warned that Americans could see larger refund checks in 2026 after Congress passed the “One Big Beautiful Bill Act” (OBBBA) in the July 2025 legislative session. The new law included a range of individual tax‑reduction measures, such as higher child‑tax credits, a larger standard deduction, an expanded state‑and‑local‑tax (SALT) deduction cap, and new deductions for auto‑loan interest and tips.
Why Refunds Will Be Bigger
Bessent explained on the “All‑In Podcast” that the OBBBA’s provisions were retroactive to the beginning of 2025. Most workers did not adjust their payroll withholdings when the law passed, so they likely over‑withheld during the year. Once the tax returns are filed, the unused over‑withholding will be returned in the form of tax‑refunds.
“I can see that we’re gonna have a gigantic refund year in the first quarter because working Americans did not change their withholdings,” Bessent said, while also serving as acting IRS commissioner. “Depending on the number of workers, households could see, $1,000‑$2,000 refunds,” he added.
Expert Views Back the Prediction
The nonpartisan Tax Foundation—an independent research group—projected that the average 2025 tax refund will rise to $3,800, up from $3,004 in 2023 and $3,052 in 2024. Tax Foundation analyst Erica York noted:
“When taxpayers file their 2025 returns in 2026, many will see larger refunds than in recent years. That’s due to OBBBA’s estimated $144 billion reduction in individual income taxes for 2025.”
“Because the IRS tables weren’t updated, workers continued to withhold more than the new law required. So the benefit of the cuts arrives all at once when returns are filed.”
Impact on Consumer Spending
Bessent also highlighted that the expected increase in refunds, coupled with a likely adjustment of payroll withholdings in 2026, should lift real wages and spur consumer spending. He said:
“They will change their withholding schedule at the beginning of the year and they will get an automatic increase in real wages, so that’s going to be a very powerful combo.”
Bottom Line
With the OBBBA’s retroactive tax cuts, Americans should expect bigger refund checks and an increase in take‑home pay once payroll withholdings adjust. The Tax Foundation’s estimates and Treasury Secretary Bessent’s comments both point to a potentially sizable boost in personal finances heading into 2026.
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