This spring might find you pleasantly surprised: the IRS is poised to send out larger tax refunds than nearly anyone expected. The numbers, according to tax experts, could break previous records—not just in the size of the checks, but in how many Americans see a windfall. The reason? Congress passed the One Big Beautiful Bill Act last summer, and tucked inside were several retroactive updates to 2025’s tax rules. These offer a more generous standard deduction, a higher ceiling on property-tax write-offs, and an extra deduction for most people 65 or older.
But here’s where things get interesting: The IRS, in its infinite bureaucracy, didn’t update the tax withholding tables. That’s the system that decides how much comes out of your paycheck—or any regular income—over the year. For most folks, that meant they unknowingly paid too much to Uncle Sam throughout 2025.
“Most people had no idea about these tax breaks and didn’t adjust their withholdings,” explains Erica York, vice president at the nonpartisan Tax Foundation. “So when everyone files in 2026, that’s when the refunds will kick in—and for many, it’ll be a pleasant surprise.”
How substantial are we talking? The Tax Foundation predicts the average refund this season will swell to $3,800, well above the roughly $3,000 seen in the previous two years. Those in the middle and upper rungs of the income ladder will benefit most, York says—lower-income families rarely owe enough to see much change, while high earners see the advantages taper off. Taxpayers sitting between the 60th and 80th percentile are likely to see their tax bill drop, on average, by $1,150 compared to last year. Ninety-eight percent of this group will owe less for 2025.
If you’re one of the millions expecting a bigger check this time around, how can you make it count?
A solid first move: bolster your emergency fund. If unexpected expenses or last year’s holiday bills took a bite out of your savings, this is a chance to restore your financial safety net. “Aim for three to six months’ worth of living expenses,” advises certified financial planner Gary Williams, CEO of Williams Asset Management. Married couples or two-income households might manage with a smaller cushion, but single earners should target the higher end.
2. Prepare for Major Expenses
Big expenses—college tuition, car repairs, a family trip—loom on the calendar for many. Using your refund to prepare lets you smooth out your cash flow and avoid painful budget surprises. Struggling to manage your money? The right budgeting app, like Monarch, can help you track every dollar and keep your household’s finances unified.
3. Plan Ahead—Deliberately
There’s a psychological twist to refunds: people often treat them as a bonus, fueling impulse spending. Planning a purpose for your refund—paying down debt, beefing up savings—makes you less likely to fritter it away. “When you decide ahead of time, the temptation fades fast,” says Michelle Wolff, a financial advisor at HB Wealth. Go a step further: set a percentage and name its purpose. Those who do, evidence shows, consistently save more.
Keep your refund accessible, recommends CFP and accountant Benjamin Dorsey of Wealth Enhancement. A high-yield savings account is a smart place to park those dollars until you need them.
4. Strengthen Your HSA
If you have a high-deductible health insurance plan, consider funneling some of your refund into a health savings account. Williams highlights the triple tax advantage: contributions are tax-deductible, investments grow tax-free, and withdrawals for qualified care aren’t taxed. For 2026, individual HSA limits are $4,400—or $8,750 for families. If you’re 55 or older, you can kick in another $1,000.
5. Split Your Refund Automatically
Still working on your return? The IRS lets you use Form 8888 to divide your refund between up to three accounts. Sorting your money at the start makes it far easier to meet competing goals—no shuffling funds later.
6. Review Next Year’s Withholding
With the new tax law in place, withholding rules have finally caught up for the coming year. This means future refunds should look familiar—less bloated, more predictable. Still, experts advise calibrating your withholdings so you neither get back too much nor owe a painful bill come April. Aligning your tax payments with what you actually owe makes cash flow smoother all year. Forms W-4, W-4V, and W-4P cover most job, Social Security, and pension income.
Some people savor the drama of a big refund; others prefer to owe a touch. Pick what fits, says Tom O’Saben, director at the National Association of Tax Professionals. “The main thing—no nasty surprises.”
Tax season may never be fun. But a little foresight turns a surprise windfall into a real opportunity—and puts more control (and maybe a bit more calm) in your hands.
