California Taxpayers Could See Larger Federal Refunds in 2026: What You Need to Know
As tax season ramps up across California, many taxpayers are wondering how much they might get back when filing their 2025 tax returns next year. According to recent reports, federal tax refunds could be noticeably larger in 2026 owing to significant changes in the tax code brought about by the sweeping legislation known as the One, Big, Beautiful Bill which became law in 2025. ### Why Federal Refunds May Increase
Historically, the average federal tax refund has hovered around a little above $3,000 for Americans. However, financial information site Bankrate forecasts that refunds could exceed $4,000 in 2026 for some taxpayers, partly because the new tax bill introduced several provisions that reduce taxable income and increase credits and deductions.
The Internal Revenue Service (IRS) highlighted in a January 8th news release that the One, Big, Beautiful Bill implements changes such as:
- Permanently higher standard deductions
- More generous tax brackets that lower the overall tax rate for many earners
- Elimination of federal taxation on tips and overtime pay
- Enhanced credits and deductions for dependent children
- The expiration of the federal electric vehicle tax credit
Many of these changes took effect for the 2025 tax year, meaning they will directly impact tax returns filed in early 2026. ### What Does the Law Mean for Taxpayers?
The acting IRS Commissioner Scott Bessent expressed confidence that these adjustments will aid hardworking Americans, stating, “The law delivers tax cuts for working families” and that the IRS and Treasury had been preparing to update their processes and forms to accommodate these changes efficiently.
While the bill makes permanent many 2017 tax law provisions that were about to expire, it also introduces a mix of temporary and new permanent modifications designed to ease the tax burden on many individuals and families.
Average Tax Refund Trends
Bankrate reminds taxpayers that refunds vary widely based on individual situations, tax credits, deductions, and income levels. Typical refund amounts fluctuate yearly due to IRS inflation adjustments and changes in tax policy.
The IRS data shows the average tax refund in recent years:
- 2015: $2,797
- 2020: $2,549
- 2022: $3,252
- 2025: $3,167 (projected)
This year, some taxpayers could see their refunds increase by $675 to $1,000 compared to prior years, according to Bankrate’s analysis.
Filing Deadlines and Refund Timing
California taxpayers must file their 2025 federal and state income tax returns by Wednesday, April 15, 2026. Those needing more time can request a six-month filing extension; however, any taxes owed still need to be paid by the April deadline to avoid penalties and interest.
To receive a refund quickly, taxpayers should file electronically and opt for direct deposit. The IRS estimates that most error-free returns filed electronically will have refunds issued within about 21 days. Paper filings or amended returns can delay refunds, sometimes taking four weeks or longer to process.
For real-time status updates, taxpayers can use the IRS’s Where’s My Refund? tool online.
Additional Resources for Californians
For those seeking help and answers related to living and working in California, How to California offers a comprehensive guide covering state laws, history, culture, recreation, and more. Readers can send questions via email at [email protected].
Angela Rodriguez
The Modesto Bee
Contact: 279-386-2738
Email: [email protected]
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