Essential Shifts in Construction: What to Expect by 2026

Understanding Key IRS Datapoints for 2026 Tax Refund Trends

Update The Impact of the One Big Beautiful Bill Act on Tax Filers The 2026 tax filing season brings notable changes for taxpayers across the board, primarily driven by the new provisions established under the One Big Beautiful Bill Act (OBBBA). As taxpayers file their returns for the 2025 tax year, many can expect to receive larger refunds than they have seen in recent years. This performance is attributed to the OBBBA, which aims to lessen the tax burden on individuals and incentivize economic activity. Specifically, a sizable estimated tax cut of approximately $129 billion is projected for the year 2025, yet the consequences of the act extend far beyond mere refunds. Three Key Metrics to Monitor during 2026 Filing Season As we enter the 2026 tax filing period, three crucial metrics stand out that will effectively gauge how the OBBBA is influencing taxpayers: Average Refund Size: Early estimates predict the average refund in 2026 will reach approximately $2,290, marking a notable 10.9% increase compared to the higher refund levels of previous years. This increase is crucial for understanding how taxpayers are benefitting from the provisions of OBBBA. Total Amount of Refunds Issued: The total amount refunded during the first week of reporting is already at $19.95 billion, suggesting an accelerated pace relative to past years. This uptick indicates a significant overall impact on household finances as families prepare their returns. Total Number of Refunds Issued: With close to 104 million refunds issued in 2024 and exceeding 103 million in 2025, this number is predicted to grow even further in 2026. As nearly two-thirds of filers have historically received refunds, a proportionate increase in returns issued will highlight the overall reach of the OBBBA. Wider Economic Implications of the Tax Cuts While many may focus on the surge in refunds, it is essential to recognize that the OBBBA's real economic impact lies in its creation of permanent reductions in marginal tax rates. These reductions aim to enhance work incentives and ultimately fuel long-term economic growth. While taxpayers appreciate receiving larger refunds, it should be noted that many were over-withheld during 2025 due to unadjusted IRS withholding tables and thus must wait until tax season to see the benefits of change. Current Tax Policy Framework and Expected Changes for 2026 The framework provided by the OBBBA includes several benefits meant to aid individuals and families, including: Substantial increases to the standard deduction — up to $32,200 for married couples filing jointly. Enhanced deductions for overtime and tips, along with a significant increase in the child tax credit. Eliminating taxes on tips, overtime, and vehicle loan interest, which should lead to net savings for taxpayers. Such adjustments reflect a concerted effort by lawmakers to modernize the tax code and bring tax relief to a larger array of working families and seniors. Potential Challenges and Misconceptions to Consider It is important to recognize the potential misconceptions surrounding these tax reforms. Some voters might presume that higher refunds equate to a healthier economy. However, while larger refunds may seem beneficial, they often reflect retroactive tax cuts instead of immediate financial relief. Moreover, as taxpayers may not see the full effects of these cuts until they disperse through the economy, achieving a genuine sense of financial stability can take longer than expected. Why Staying Informed Matters The tax landscape is continually evolving, making it essential for taxpayers, especially CPAs and small to medium businesses, to stay briefed on these changes. Being informed enables accurate planning and maximizes potential benefits from upcoming tax provisions. As taxpayers navigate the 2026 filing season, understanding these shifts will provide clearer visibility into their financial future.