How This Economy Might Impact Your 2026 Tax Refund
U.S. taxpayers are getting bigger income tax refunds so far in 2026, boosted in part by tax provisions included in the One Big Beautiful Bill Act (OBBBA).
As of March 6, 2026, the average refund was $3,676, according to the IRS. That's up from $3,324 the previous year. The total number of refunds is holding steady, having risen only 0.2% year-over-year, so this is a consistent gain.
While tax policy plays the biggest role in the size of your refund, the economy can play a role as well. Here's a look at how the current state of the economy can impact your 2026 tax refund.
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OBBBA Tax Cuts Boost Refunds
When gauging how your tax refund can be affected by the economy, it helps to understand the OBBBA's impact.
According to a report from Principal Asset Management, tax cuts included in the bill will lead to a "meaningful increase" in average cash tax refunds of roughly $700 per taxpayer. That will lift the typical refund to around $3,800 per filer.
The result is this year could be "one of the largest tax-refund seasons in U.S. history," according to a report from Fidelity, leading to "meaningful increases" in disposable cash.
In this way, the OBBBA will actually have an impact on the economy by putting more money in Americans' pockets.
Iran War Might Cut Into Your Refund
Meanwhile, the Iran war might take some of that money right back out of your pocket.
Since the United States and Israel first attacked Iran on Feb. 28, oil and gas prices have skyrocketed.
A gallon of unleaded gas was $3.99 on March 24, according to GasBuddy. That's more than a dollar higher than the prior month.
“When a war pushes oil up, it is not just a gasoline story,” Paul Dietrich, chief investment strategist at Wedbush Securities, told NBC news. “Gas prices have already jumped sharply, and diesel costs are rising too. That means higher costs for commuting, groceries, shipping and basic household living.”
Economy 'Skewed' Toward Higher Earners
The main way the economy will affect tax refunds is that current economic growth mostly favors Americans who earn better-than-average incomes. As your income goes up, your tax refund gets proportionally higher unless you're among the top 1% of earners.
Benefits are "skewed" toward middle- and higher-income earners, according to Principal Asset Management. This will likely "exacerbate the already widening 'K-shaped' [economic] divergence" across consumers.
In contrast, lower-income Americans face an "affordability challenge" due to the combination of war-impacted inflation, a softening labor market and "limited participation" in the stock market's positive wealth effects.
As CBS News reported, upper-middle-income households are likely to get the biggest lift from the OBBBA. Here's a breakdown of the expected tax refund boost in 2026 by different income quintiles:
Lowest quintile: ($33,000 per year or less): $18 higher than last year
Second quintile: ($33,000 to $62,200): $129
Middle quintile: ($62,200 to $101,000): $597
Fourth quintile: ($101,000 to $165,300): $1,401
80-90 percentile: ($165,300-$234,900): $2,044
Top 10%: ($210,000 or higher): $3,189
Top 5%: ($316,100 or above): $3,748
Top 1%: ($1,149,000 and above): $908
Average: $752
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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