"If you've been dreading filing your taxes, there might be a pleasant surprise awaiting you on the other end: a larger-than-usual refund. President Donald Trump's "Big Beautiful Bill," which passed in July, aimed to overhaul Americans' taxesby extending 2017 tax cuts and enacting a slew of new measures. Those include new deductions for Social Security benefits to older Americans, an increase in the child tax credit, and deductions for taxes on tips or overtime."
""Instead of your employer adjusting how much tax they withhold from your paycheck to reflect this new tax law for 2025, you'll have to get the benefit of those tax changes when you file your tax return in 2026," Erica York, the vice president of federal tax policy at the Tax Foundation, said. "Most people have overwithheld their taxes to some extent.""
"But your paycheck probably hasn't reflected those changes yet. Right now, your employer might bewithholdingmore taxes from your paycheck than you'rerequired to pay, since the IRS opted not to change withholding this year as they phase in the new law. If that's the case, that extra money withheld could be coming back to you as a bigger refund after you file."
President Donald Trump's 'Big Beautiful Bill,' passed in July, extends 2017 tax cuts and adds measures such as deductions for Social Security benefits for older Americans, an increased child tax credit, and deductions for taxes on tips or overtime. The IRS did not update payroll withholding for 2025, so many employers continue to withhold more tax than currently owed. That excess withholding will often be returned as larger refunds when taxpayers file in 2026. Middle- and upper-middle-income filers stand to gain most, while the lowest earners have little tax liability and the highest earners see limited benefit. The Tax Foundation estimates average refunds will rise from $3,052 in 2024 to $3,800 for tax year 2025.
Read at Business Insider
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