IRS data reveals average tax refunds increased by $277 this season, but analysis shows middle-income Americans face an average tax increase of $900 in 2026 under recent tax legislation, while the top 1% of earners receive $117 billion in cuts.
The Refund Numbers Tell Two Stories
The IRS processed 77.8 million returns through March 20, 2026, with average refunds climbing from $3,284 to $3,561. President Trump called the tax season a victory for working families, highlighting provisions eliminating taxes on tips, overtime, and Social Security benefits. Administration spokesman Kush Desai stated the vast majority of working-class seniors and everyday workers would pay no taxes on Social Security, tipped, or overtime income. The White House attributed higher refunds to the Working Family Tax Cuts and the One Big Beautiful Bill Act.
Where The Tax Cuts Actually Go
The Tax Foundation calculated the One Big Beautiful Bill reduced individual taxes by roughly $129 billion for 2025. However, the Tax Policy Center found 60% of those savings benefit the richest 20% of households earning over $217,000. The Institute on Taxation and Economic Policy reported the top 1% receives $117 billion in tax cuts in 2026 alone, part of a $1 trillion reduction over ten years. The bottom 95% of taxpayers face tax increases on average, driven by expanded tariffs and income tax changes. Additionally, the legislation eliminated over $40 billion in IRS tax enforcement funding specifically earmarked for investigating wealthy tax evaders.
Geographic And Income Disparities
The middle 60% of Americans see varying impacts depending on location. Residents of Wyoming, Nebraska, and Florida face the highest increases, paying between $1,240 and $1,430 more on average. Ray Madoff, a tax policy professor at Boston College Law School, told NBC the richest Americans can effectively opt out of the tax system while salary earners pay substantial taxes. The law also terminated health tax credits aimed at reducing insurance costs. Investigating the richest 10% of taxpayers returns $12 for every dollar spent on enforcement, with some estimates reaching $26 per dollar. Corporations also benefit from little or no corporate income tax, while foreign investors in U.S. businesses receive $32 billion in tax cuts for 2026.
