The One Big Beautiful Bill Act (OBBBA) will double tax refunds per household, on average. Tune in to fully appreciate those benefits when the 2026 filing season rolls around! With an average expected refund size of $3,750, this is 18% more than last year. We estimate the OBBBA’s tax cuts would increase the nation’s GDP in 2026 by approximately 0.3%. This move will result in a historic $220 billion reduction in household income taxes.
In some important ways, the OBBBA’s provisions are even better positioned to increase the amount households receive in refunds. It will save them money by reducing their annual tax payments. The typical refundable amount is set to increase drastically. Some families could pay less tax overall rather than getting bigger refunds. This increase in equity indicates that OBBBA benefits all income levels, including some of the lowest earners in the country.
Or, of course, if the IRS didn’t stick to its plan and didn’t revise its withholding tables at the beginning of 2025. Most of OBBBA’s new deductions have been retroactively applied from the start of that year. Your tax deductions should include exemptions for tip and OT income. These adjustments can create huge differences in the tax return filings you might be subject to 810. As a result, most households will need to utilize the annual tax filing process to reconcile their tax obligations with the federal government.
Last year, we saw a big jump in refunds — this year we’re already seeing a huge increase. Total refunds are expected to increase by about $80 billion! Some analysts think refunds might jump by as much as 30%. This would be the worst possible outcome, not the most likely one. OBBBA’s tax cuts will increase consumer spending by about $90 billion this year. Such an increase would be a boon to workers struggling with an increasingly tight labor market and economic forces that may soon exacerbate their struggles.
Beyond just strengthening household balance sheets, several of OBBBA’s other provisions intentionally set the stage for long-term economic growth. All three — fiscal stimulus, monetary policy easing, and a less restrictive trade policy — are reinforcing each other. They hope to get the labor market back to equilibrium by spring or summer of 2026. The rosy picture painted by these reforms adds up to an above-consensus, optimistic outlook for economic growth over the next year.
The ramifications of the OBBBA go far beyond short-term tax cuts. It affects mostly high-income households. The act reduces household income taxes by an average 0.7% of GDP. Such a change would deeply affect the economic picture headed into 2026. Those expected benefits underscore how critical tax policy can be in shifting consumer behavior and improving economic performance at large.