Average tax refund expected to be even higher in 2026, according to IRS data
Tax season is here, and new data from the Internal Revenue Service shows the average tax bill will be even higher this year.
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- Based on the latest IRS statistics released on Friday, March 13, the average federal income tax refund as of March 6 is $3,676.
- The IRS CEO testified before the House Ways and Means Committee that the average refund for filers who claim new deductions such as tips, overtime pay, new car loan interest and senior bonuses has increased by $775.
Tax refunds will arrive in many bank accounts just days after wallets were hit by another financial shock: soaring gas prices.
Every corner of a major road is another reminder that travel is expensive. And whether we like it or not, rising gas prices serve as a mental stop signal for how much money people are willing to spend on other things.
With each passing day, pump prices become more shocking. On Wednesday, March 18th, I found a gas station in Ferndale for $4.09 per gallon. $4 a gallon for gas? Luckily, you can get cheaper rates by driving elsewhere. But are you wondering where the average is heading?
The U.S. and Israeli offensive against Iran began on February 28, about a month after the Internal Revenue Service began processing returns for this year’s tax season on January 26. The tax return deadline is April 15th, so there are still many returns to be filed next month.
Promise of a “huge” refund for one year
This year will be a big tax season, given the special tax breaks included in the One Big Beautiful Bill signed into law on July 4th for the middle of 2025. Trump administration officials are using adjectives like “huge” to describe the wave of tax refunds coming up in the current 2026 tax season.
Given the right conditions, rebates could increase spending, but the fear now is that much of that extra cash could be absorbed by higher prices for things like pumps.
“Families rely on these tax rebates, especially those below the highest income levels, and these are the same people who will be most directly affected by rising oil and food prices,” said Michael Greiner, associate professor of business administration at the University of Auckland’s School of Management.
Greiner sees further signs that “the economy is under stress and could slip into recession due to the new challenges posed by the Iran war.”
Before the war, prices were soaring.
The US economy grew at a snail’s pace in the last three months of 2025.
Gross domestic product (GDP), a measure of all goods and services produced in the United States, grew at an annual rate of 0.7% in the fourth quarter of last year, according to second estimates released Friday, March 13 by the U.S. Bureau of Economic Analysis.
Real GDP increased by 4.4% in the third quarter. In 2025 as a whole, GDP increased by 2.1%.
Meanwhile, inflation remains a worrying concern. Over the past 12 months, the consumer price index rose 2.4% in February before seasonally adjustment, according to data released March 11 by the U.S. Bureau of Labor Statistics. February’s CPI numbers represent the period before Iranian airstrikes caused oil prices to soar and inflation expectations to rise.
Tax refund amount increased from last year
The average federal income tax refund as of March 6 is $3,676, based on the latest statistics released by the Internal Revenue Service on Friday, March 13.
This was an increase of 10.6% compared to the same period last year. or an average increase of $352.
To date, the IRS has issued $160.83 billion in tax refunds, This was an increase of 10.9% compared to the same period one year ago.
The White House said it expects the average refund amount to increase by more than $1,000. Even as the April 15 deadline approaches, overall average returns are unlikely to be much higher. But let’s see what happens.
Many taxpayers who qualify for one of the One Big Beautiful Bill Act’s four big tax breaks are likely to be excited about adding hundreds of dollars or more to their tax refunds this tax season.
Why some tax refunds are larger than others
IRS CEO Frank Bisignano testified before the U.S. House of Representatives Ways and Means Committee on March 4 that the average refund for early filers who claimed tax credits for things like tips, overtime pay, interest on new car loans and enhanced senior citizen deductions increased by $775.
Mr. Bisignano, who also serves as head of the Social Security Administration, told the committee that an IRS analytics group has measures showing that by the end of tax filing season, the average refund for those who claim the four major deductions will be $1,000 higher than a year ago.
Based on IRS statistics through December 26, 2025, the average tax refund in 2025 was $3,167, an increase of 0.9%.
So far, just over four out of 10 tax returns filed at the beginning of the season have claimed at least one of the four tax credits, Bisignano said.
He told the House Ways and Means Committee that adults 65 and older are receiving the biggest benefits so far this filing season, and taxpayers with incomes under $100,000 have seen the largest increase in refunds.
The U.S. Treasury also released some interesting statistics.
Approximately 63.5 million tax returns had been processed as of March 8, according to a Treasury news release issued on Tuesday, March 10. This represents 45% of the total number of tax returns expected to be filed by April 15th.
And the Treasury Department has some interesting insights into the number of returns that claimed key tax credits on the new Schedule 1-A when filing their 2025 tax returns this year.
Pay off large bills with income tax refunds
Long before the Iran airstrike, many U.S. consumers were already looking to use their refunded cash rather than paying off some of their old bills. As the prices of many goods rose, many people turned to high credit card debt to cover their expenses.
“As Americans rely on refunds to make ends meet, ‘refund season’ has effectively become ‘bailout season,'” concludes a new study conducted by Qualtrics on behalf of Intuit TurboTax.
According to the survey, 51% of respondents expecting a refund said they would have to rely on their income tax refund to cover basic necessities due to the rising cost of living, including rising costs related to housing and groceries.
The survey was conducted online in the U.S. by Qualtrics on behalf of Intuit TurboTax from February 5 to February 9. 1,010 adults aged 18 and older participated.
And oil prices soared through the roof.
As of Friday, March 13, the average price of a regular gallon of gasoline nationwide was $3.63, according to AAA. This is up from $2.94 a month ago and up from an average of $3.079 a year ago.
As of Monday, March 16, the national average was $3.718 per gallon.
And the price of gas at the pump continued to rise.
As of Wednesday, March 18, the national average price for regular was $3.842 per gallon, according to AAA.
Mark Zandi, chief economist at Moody’s Analytics, said on March 12: “If oil prices stay around $100 a barrel, the price of regular unleaded crude oil will exceed $4 a gallon.”
If prices remained at that level for a year, the average American household would pay about $1,000 more for gas, he said.
“Obviously, other prices would go up as well, and the total cost for that household would increase by nearly $1,500 a year,” Zandi said.
He said it is currently unlikely that oil prices will stay near $100 a barrel for that long. Still, this example provides some context about the potential impact on household finances.
“With each passing day, higher oil prices will cause even more damage to an already fragile economy with low job growth and rising unemployment,” Zandi said.
For many families, large income tax refund checks won’t arrive quickly. Unfortunately, the question now seems to be, “Is that enough?”
Contact personal finance columnist Susan Tompol: stompor@freepress.com. follow himr X @tompor.
