Americans Will Get ‘Gigantic’ Tax Refund Next Year, Treasury Secretary Says

Americans may be in for larger-than-usual tax refunds next filing season, according to Treasury Secretary Scott Bessent, who says the recently enacted One Big Beautiful Bill Act could produce a noticeable windfall when returns are filed.

Speaking on the All-In Podcast, Bessent explained that the tax changes signed by President Donald Trump in July were applied retroactively to the start of the year. Because most workers did not revise their payroll withholding after the law took effect, he said many households may receive the benefit in the form of refunds rather than higher paychecks throughout the year.

“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 told the “All-In Podcast” hosts. “I think households could see, depending on the number of workers, $1,000- $2,000 refunds.”

An independent analysis points in the same direction. In a December 17 report, the Tax Foundation said that refunds are likely to be larger than usual in the upcoming filing season as a result of the OBBBA’s tax reductions for 2025.

According to the group, the legislation lowered individual tax liabilities by an estimated $144 billion for the year. Outside projections suggest that as much as $100 billion of that reduction could show up in the form of higher refunds. While the impact will vary by taxpayer, the foundation said the average refund could rise by as much as $1,000.

“But because the IRS did not adjust withholding tables after the law passed, workers generally continued to withhold more taxes from their paychecks than the new law required. As a result, instead of gradually receiving the benefit of the tax cuts through higher take-home pay during the year, most taxpayers will receive it all at once when they file their returns,” the Tax Foundation wrote.

The organization also outlined several provisions in the OBBBA that could drive refunds higher, citing expanded or new tax breaks such as a larger child tax credit, a higher standard deduction, an increased cap on the SALT deduction, and added deductions tied to senior income, auto loan interest, tips, and overtime pay.

{Matzav.com}