Treasury Secretary Predicts Big Tax Refunds Ahead
This week, Treasury Secretary Scott Bessent shared his thoughts on upcoming tax refunds, predicting that they will be quite substantial during the next filing season due to the new tax cuts from what President Trump refers to as the One Big Beautiful Bill Act.
On the “All In Podcast,” Bessent elaborated that the tax changes included in the law signed by Trump in July are retroactively effective from the start of the year. Since many workers won’t revise their paycheck withholdings in light of these new provisions, they can anticipate a hefty refund when they file their taxes in 2026.
“We’re seeing significant tax refunds early on because employees largely kept their withholdings unchanged,” remarked Bessent, who is also acting as the commissioner for the Internal Revenue Service.
He added, “I think it’s likely households could see rebates ranging from $1,000 to $2,000, depending on how many workers are in the family.”
Bessent’s forecast matches what other tax experts are suggesting, indicating that Americans can indeed look forward to larger tax refunds.
The Tax Foundation, a non-partisan organization, estimates that the average tax refund for the tax year 2025 is expected to be around $3,800. That’s a marked increase from $3,004 in 2023 and a rise from $3,052 last year.
Erica York from the Tax Foundation assessed that “when taxpayers file their 2025 returns in 2026, they will likely receive bigger refunds than they have in recent years due to the One Big Beautiful Bill Act, which is estimated to reduce personal income taxes by about $144 billion in 2025.”
However, York did emphasize a key point: “Since the IRS didn’t update the withholding schedules after the legislation passed, most workers had more taxes taken out of their paychecks than what the new law required. Consequently, instead of enjoying the tax benefits little by little throughout the year, most will get the full benefits back all at once during tax time.”
Bessent predicts that next year, adjustments will be made to withholding, which, along with larger refund amounts, should boost consumer purchasing power. “I think they will revise the withholding rates at the year’s start, leading to a natural increase in real wages,” he expressed. “So, it seems like a really effective combination.”
The One Big Beautiful Bill Act encompasses several provisions aimed at alleviating individuals’ income tax responsibilities, such as increasing the child tax credit and standard deduction, modifying state and local tax deductions, as well as adding deductions for auto loan interest, overtime pay, and tip income.
