US Tax Refunds Rise About 11%, Falling Short of Administration's $1,000 Promise

As of late March 2026, the average IRS tax refund has increased by about $359 year-over-year, driven by new tax breaks from the 2025 OBBBA law.

This increase falls significantly short of the "$1,000 or more" gain promised by the White House, creating a political messaging challenge.

Factors like partial uptake of the new deductions and rising oil prices are contributing to the gap, with the final average increase unlikely to meet the target.

The 2026 tax season shows refunds are meaningfully larger than last year, but they are not meeting the administration's high-profile promises.

The primary reason for the increase is the 'One Big Beautiful Bill Act (OBBBA)', a tax law signed in July 2025. This legislation introduced several new, targeted deductions for things like tips, overtime pay, car loan interest, and an extra deduction for seniors. It also raised the cap on the State and Local Tax (SALT) deduction. These changes were specifically designed to increase the amount of money taxpayers get back in 2026.

So, why is the average increase hovering around $359 instead of the promised $1,000? There are three main reasons. First, the benefits are not universal. Mid-season data from the Treasury showed that only about 45% of filers had claimed one of the new deductions. This partial uptake naturally limits how much the overall average can rise, as more than half of taxpayers haven't yet utilized these new breaks.

Second, the natural rhythm of tax season plays a role. Tax refunds typically peak in mid-to-late February after the IRS begins processing returns that include credits for low-income families. After this peak, the average refund amount tends to drift lower as April 15 approaches. The current average reflects this seasonal decline from a higher point earlier in the year.

Finally, external economic pressures are dampening the perceived benefit of the larger refunds. A recent oil price spike, tied to conflict in Iran, has pushed gasoline prices higher. This means that even as households receive a bigger check from the IRS, that extra money is being eroded by higher costs at the pump and for other goods, making the financial gain feel less significant.

This gap between the political promise and the financial reality creates a messaging challenge for the White House heading into the 2026 midterm elections. While refunds are indeed higher, the shortfall makes it difficult to declare a complete victory. Barring a major surge from late-filing, higher-income taxpayers, the final average increase is expected to settle well below the $1,000 mark.

OBBBA (One Big Beautiful Bill Act): A 2025 tax law that created new deductions for tips, overtime, car loan interest, and seniors.
SALT Cap: The State and Local Tax deduction cap, which limits the amount of state and local taxes that taxpayers can deduct on their federal returns.
PATH Act: A law that requires the IRS to hold refunds for taxpayers claiming the Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC) until mid-February to prevent fraud.

US Tax Refunds Rise About 11%, Falling Short of Administration's $1,000 Promise

As of late March 2026, the average IRS tax refund has increased by about $359 year-over-year, driven by new tax breaks from the 2025 OBBBA law.

This increase falls significantly short of the "$1,000 or more" gain promised by the White House, creating a political messaging challenge.

Factors like partial uptake of the new deductions and rising oil prices are contributing to the gap, with the final average increase unlikely to meet the target.

The 2026 tax season shows refunds are meaningfully larger than last year, but they are not meeting the administration's high-profile promises.

OBBBA (One Big Beautiful Bill Act): A 2025 tax law that created new deductions for tips, overtime, car loan interest, and seniors.
SALT Cap: The State and Local Tax deduction cap, which limits the amount of state and local taxes that taxpayers can deduct on their federal returns.
PATH Act: A law that requires the IRS to hold refunds for taxpayers claiming the Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC) until mid-February to prevent fraud.