How the new tax bill could boost your refund next year

Select taxpayers could receive larger tax refunds when they file their taxes in 2026 due to President Donald Trump’s latest tax law, the Big Beautiful Bill Act (OBBBA).

Because some provisions of the law go into effect retroactively at the beginning of 2025, some taxpayers — such as workers who receive tips or overtime pay and those who qualify for the child tax credit — may get a larger refund when they file next year.

This is because the IRS will wait until 2026 to make changes to some withholding rules that will have to be adjusted because of the new law.

“Taxpayers with significant income that qualifies for the new deductions, such as supplemental income and overtime, could get a significant refund with the tax cut implemented through 2025,” said Alex Muriciano, senior policy analyst at the Tax Foundation, a nonpartisan think tank. Investopedia In an email message. “But the deduction has not changed to reflect that yet.”

In addition, taxpayers who get the expanded child tax credit and who take the standard deduction may get a larger tax refund as well. OBBBA increased the child tax credit by $200 to $2,200 and the standard deduction by $750 to $15,750 for single filers.

The law, which Trump signed in July 2025, extended, changed and made permanent some provisions of the 2017 tax cuts, which were scheduled to expire in 2025. The law also implemented new rules such as not imposing a tax on tips, not imposing a tax on overtime, and not imposing a tax on car loan interest, as well as additional deductions for the elderly.

Most taxpayers may not see much difference when they file their taxes in 2026, Murciano said.

“A relatively small percentage of taxpayers will be eligible for these new cuts. [For example,] “Only about 2.5% of workers get tips. I think a lot of taxpayers will see less change than they might expect,” Murciano said.