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Is the OBBBA Delivering Bigger Refunds in 2026? Here is the Data

We are a few weeks into the 2026 tax season, and the initial numbers from the IRS are painting an interesting picture. Everyone has been asking if the new legislation—the One Big Beautiful Bill Act (OBBBA)—would actually result in more cash in hand. The early statistics suggest the answer is yes, though perhaps not as dramatically as the initial forecasts predicted.

Currently, the average refund is sitting at $2,476. That is a solid 14.2% increase (about $300) over this time in 2025. While policymakers were hoping to see a $1,000 jump, it is important to remember that we are still in the "preliminary phase" of the season. As more complex returns are processed, these averages will likely shift. However, the trend line is moving in the right direction, and it is largely driven by specific provisions in the OBBBA that you need to be aware of before we file your return.

The OBBBA Provisions Boosting Refunds

For our clients here in Las Vegas and across the country, several new deductions are making a tangible difference in reducing taxable income. Here is a breakdown of the key changes.

Tax calendar planning for 2026

Relief for Hourly and Service Workers

Given our location in Nevada, these two provisions are sparking a lot of conversations with our clients in the hospitality and service sectors:

  • The Overtime Premium Pay Deduction: If you work significantly more than 40 hours a week, this is for you. The "half" of your time-and-a-half pay (mandated by the FLSA) is now deductible. There is a cap of $12,500 for single filers and $25,000 for married couples filing jointly.
  • The Tips Tax Deduction: For those in occupations that customarily receive gratuities—bartenders, servers, dealers, and nearly 70 other roles—you can now deduct up to $25,000 of "qualified tips" annually. To claim this, married taxpayers must file jointly.

Planning Note: Both deductions are subject to income limits. They begin to phase out at a Modified Adjusted Gross Income (MAGI) of $150,000 ($300,000 for joint filers) and disappear completely at $275,000 ($550,000 joint). These can be claimed whether you itemize or take the standard deduction.

Updates for Drivers and Families

  • Auto Loan Interest Deduction: This is a new one. You can deduct interest on auto loans (up to $10,000) for vehicles purchased for personal use, provided the vehicle was assembled in the U.S. and the loan originated after 2024. This is available to both itemizers and standard deduction filers, phasing out between $100,000 and $150,000 MAGI ($200k–$250k for couples).
  • Expanded Child Tax Credit: The credit has bumped up to $2,200 per child. This full amount is available for joint filers earning up to $400,000 and single heads of household up to $200,000.
  • Standard and Senior Deductions: The standard deduction is now $31,500 for married couples and $15,750 for singles. Furthermore, the "Senior Bonus" offers an additional $6,000 deduction for those over 65, regardless of whether they itemize.
  • SALT Cap Adjustment: For our clients in states with higher tax burdens, the State and Local Tax (SALT) deduction limit has been raised from $10,000 to $40,000. This cap begins to phase down for taxpayers with a MAGI over $500,000.

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Reviewing tax documents for OBBBA deductions

Why Refunds Might Feel Higher

Beyond the new laws, there are mechanical reasons for the larger refunds we are seeing. Many of these tax cuts were passed retroactively or mid-year, and the IRS simply didn't update the withholding tables in time. Consequently, many of you likely had more tax withheld from your paychecks than was necessary—essentially a forced savings account that is now paying out.

Additionally, inflation adjustments to tax brackets are helping to prevent "bracket creep," ensuring cost-of-living raises do not accidentally push you into a higher tax tier. We also saw the Adoption Tax Credit become partially refundable, putting up to $5,000 back in pockets even if no tax was owed.

Navigating a Challenging Tax Season

While the refunds are promising, the administration of this tax season is proving difficult. The IRS has lost a significant portion of its workforce since January 2025 and is battling a backlog of returns. We are already seeing a decrease in processing speeds compared to prior years.

This is not the year to rely on automated software or guess your way through new forms. Whether you are a business owner, self-employed, or simply trying to maximize your personal return under the new OBBBA rules, precision is key. We focus on personal attention and detailed tax planning to ensure you don't leave money on the table or trigger an unnecessary review.

If you are unsure how the tips deduction, overtime rules, or the new auto loan interest provisions apply to you, reach out to us. We are fully up-to-speed on these changes and ready to help you navigate this season with confidence.

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