Millions of Americans may be in for a financial windfall next year as officials predict the country could be in for the largest tax refund season in US history.
The announcement comes as the tax filing season approaches and households begin preparing their documents.
National Economic Council Director Kevin Hassett, who is considered a leading contender for President Donald Trump’s next Federal Reserve chair, told FOX Business’ Varney & Co. on Thursday that refunds could reach unprecedented levels.
‘We are going to see the biggest refund cycle ever in the history of America, and people are going to get massive refund checks,’ Hassett said.
‘We’re expecting just that part of it alone to be worth a couple-thousand-dollar refund…the numbers are striking.’
President Trump echoed the sentiment during a recent address on Wednesday, claiming families could save between $11,000 and $20,000 annually under his administration’s tax policies, calling it ‘the largest tax refund season of all time’.
The upbeat projections come despite a recent Fox News poll showing that 44 percent of Americans feel they are falling behind financially and 74 percent rate the economy as ‘bad’ or ‘not so good’.
Hassett challenged that perception, pointing to strong wage growth and cooling inflation.
National Economic Council Director Kevin Hassett said refunds could hit record levels, fueling speculation he could be tapped by Donald Trump for the next Federal Reserve chair role
Donald Trump said families could save $11,000 to $20,000 a year under his tax plans (President Trump shows his signature after signing his ‘Big, Beautiful Bill’)
‘Wages for the typical worker were up 3.7 percent. 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 explained.
‘By our estimates right now, blue-collar workers have already seen an almost $2,000 raise this year after inflation.’
Hassett argued that Americans will ‘see it in their wallets,’ noting that many tax changes from the One Big Beautiful Bill, passed mid-year, weren’t reflected in earlier filings.
He also compared the current economic trajectory to Trump’s first term, citing three percent growth and one percent inflation as benchmarks.
November’s inflation report, which came in lower than economists expected, was described by Hassett as ‘blockbuster,’ reinforcing his belief that aggressive supply-side policies are keeping prices in check.
‘What’s happened is, as we predicted throughout this term, that if you really put the pedal to the metal on aggregate supply, then that’s gonna put downward pressure on prices,’ he said.
Meanwhile, the IRS has issued guidance on several changes tied to the One Big Beautiful Bill that will affect tax years 2025 through 2028.
Qualifying seniors will be able to deduct an additional $6,000 from taxable income, although the benefit phases out for those earning over $75,000.
Other provisions include no tax on tips, overtime, and car loan interest, which could significantly reduce taxable income for many workers.
However, some jurisdictions, including Washington D.C., have opted out of certain provisions, meaning residents there will not benefit from all changes.
The IRS also warned taxpayers about common deduction mistakes that could trigger audits and urged careful reporting of overtime pay to avoid fines.
The organization also said employers won’t face penalties for separate overtime or tip reporting in 2025 if standard requirements are met.
Workers with qualified tips can claim new deductions from 2025 to 2028, with about six million tipped workers affected. The cap is $25,000 for single filers earning over $150,000 and joint filers over $300,000.
The OBBB bill also allows no tax on overtime from 2025 to 2028. Eligible workers can deduct overtime pay above their regular rate, capped at $12,500 for single filers and $25,000 for joint filers at the same income thresholds.
