Millions of American households could be in line for a significant financial boost next year, as senior officials predict the upcoming tax season will be the most generous in the nation's history.
Record-Breaking Refunds on the Horizon
With the annual tax filing period approaching, a top White House economic advisor has made a striking prediction. Kevin Hassett, Director of the National Economic Council, stated that refunds are set to reach unprecedented levels. Speaking on Fox Business, Hassett, who is considered a leading candidate for Federal Reserve chair if Donald Trump wins the next election, declared, "We are going to see the biggest refund cycle ever in the history of America, and people are going to get massive refund checks."
He suggested the scale of the refunds could be substantial, estimating "a couple-thousand-dollar refund" for many and describing the projected numbers as "striking." Former President Donald Trump echoed this optimism, claiming during a recent address that families could save between $11,000 and $20,000 annually under his administration's tax policies, labelling it "the largest tax refund season of all time."
Economic Confidence vs. Public Perception
These bullish forecasts arrive against a backdrop of public concern. A recent Fox News poll indicated that 44% of Americans feel they are falling behind financially, with 74% rating the economy as 'bad' or 'not so good'.
Hassett challenged this sentiment, pointing to robust wage growth and moderating inflation. "Wages for the typical worker were up 3.7 percent," he explained. "So if you're running 3.7 percent wage increases at 1.6 percent core inflation, then real wages are growing at a rate of about 2 to 2.5 percent." He argued that blue-collar workers have already seen an almost $2,000 raise this year after inflation.
He attributed part of the coming refund surge to the One Big Beautiful Bill, passed mid-year, whose full effects were not felt in earlier tax filings. Hassett also hailed a recent lower-than-expected inflation report as "blockbuster," crediting aggressive supply-side policies for keeping prices in check.
Key Tax Changes for 2025-2028
The Internal Revenue Service (IRS) has now issued guidance on several major changes stemming from the One Big Beautiful Bill that will affect tax years 2025 through 2028.
Significant new provisions include:
- No tax on tips: Approximately six million tipped workers can claim new deductions from 2025 to 2028. This is capped at $25,000 for single filers earning over $150,000 and joint filers over $300,000.
- No tax on overtime: Eligible workers can deduct overtime pay above their regular rate from 2025 to 2028. The deduction is capped at $12,500 for single filers and $25,000 for joint filers at the same income thresholds.
- Senior deduction: Qualifying seniors will be able to deduct an additional $6,000 from taxable income, although this benefit phases out for those earning over $75,000.
- Car loan interest: Interest on car loans will also be tax-free under the new rules.
However, the IRS has warned taxpayers to be meticulous in reporting, as common deduction mistakes could trigger audits. The agency also noted that some jurisdictions, including Washington D.C., have opted out of certain provisions, meaning their residents will not benefit from all the changes.
With these sweeping alterations set to take effect, the stage appears to be set for a tax season that could deliver unexpected gains to millions of American workers and retirees, even as debates over the underlying health of the economy continue.
