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Tax Season Is Year-Round

How 2025–2026 rule changes to credits, brackets, and deductions are making refunds bigger or smaller, including special rules for families and seniors.

How 2025–2026 rule changes to credits, brackets, and deductions are making refunds bigger or smaller, including special rules for families and seniors.

Refund Size, Credits & Tax Rule Changes

As taxpayers navigate the 2025–2026 filing seasons, they face a tax landscape transformed by historic expansions in refundable credits, inflation-adjusted brackets and deductions, and innovative new provisions like the Qualified Overtime Compensation Deduction (QOCD). These sweeping changes are driving some of the largest average tax refunds in years, especially for families, seniors, and hourly workers. However, these gains come amid ongoing operational challenges, heightened fraud risks, and complex state-federal conformity issues that continue to complicate the tax filing experience.

Understanding these intertwined developments—and how to verify past filings and maximize current benefits—has never been more crucial.

Historic Tax Law Changes Reshape Refunds and Support Vulnerable Populations

The federal tax reforms for 2025 and 2026 were designed to combat inflation’s erosion of taxpayer purchasing power while extending targeted relief to families, seniors, and working Americans. Key highlights include:

  • Expanded and Inflation-Indexed Refundable Credits

    • The Child Tax Credit (CTC) and Additional Child Tax Credit (ACTC) now feature higher income thresholds, broadening eligibility and increasing credit amounts for many middle-income families.
    • The Earned Income Tax Credit (EITC) and Premium Tax Credit (PTC) are fully inflation-indexed, preserving their real value amid rising living costs and helping low- and moderate-income taxpayers maintain financial stability and health coverage.
    • The Adoption Tax Credit has been made fully refundable and indexed to inflation, providing $17,280 for 2025 with automatic annual increases — a significant boost to families facing high adoption expenses.

  • Introduction of the Qualified Overtime Compensation Deduction (QOCD)
    This novel deduction allows eligible hourly employees to exclude verified overtime pay from taxable income, potentially increasing refunds substantially. However, its effectiveness hinges on timely employer certification of overtime hours, which remains a common bottleneck delaying many workers from claiming the benefit.

  • Inflation-Adjusted Tax Brackets and Standard Deductions
    Seniors and heads of household particularly benefit from these adjustments, which help shield fixed-income taxpayers from inflation’s impact. The 2026 tax year saw further increases in standard deduction amounts, amplifying protections for vulnerable groups.

Together, these reforms have led to a 14% rise in average refunds, with the IRS reporting an average refund of $2,476 in early 2026 and projecting $129 billion in total refunds for the filing season—figures that highlight the profound fiscal impacts of these tax law changes.

Operational Challenges and Fraud Risks Temper Taxpayer Experiences

Despite these enhanced benefits, taxpayers continue to face significant operational hurdles that delay refunds and increase frustration:

  • PATH Act Withholding Delays Remain in Effect
    Refunds involving the EITC and ACTC are still subject to mandatory withholding until mid-February or later, causing millions of filers to wait longer for refunds.

  • ID.me Identity Verification Backlogs
    Identity authentication persists as the largest choke point in refund processing, with many taxpayers reporting multi-week or multi-month delays due to verification backlogs.

  • QOCD Employer Certification Delays
    Many hourly workers cannot claim the QOCD because employers have yet to submit required certifications. Tax professionals now strongly advise proactive taxpayer outreach to employers to expedite certification and avoid losing out on the deduction.

  • Treasury Offset Program (TOP) Refund Seizures Continue
    The automatic seizure of refunds to cover outstanding debts—such as child support, federal student loans, or unpaid taxes—remains a common source of unexpected refund reductions. Taxpayers can consult the IRS Taxpayer Advocate Service to learn how to prevent or minimize offsets.

  • Increased Manual Reviews and Fraud Audits
    The IRS’s intensified scrutiny of refundable credits has led to more frequent manual return reviews and fraud audits, further extending processing times and complicating refund timelines.

  • Paper Filing and State-Level Nonconformity Issues
    Paper returns endure especially long delays, worsened by limited IRS digitization capacity. Several states—including California, New York, Illinois, and South Carolina—have not fully conformed to the 2025 federal tax changes, which complicates filing and refund timelines. Michigan continues to serve as a cautionary example, with ongoing refund delays attributed to staffing shortages and fraud detection efforts.

  • Rising Tax Scams and “Ghost” Preparers
    Fraudulent actors exploit the tax season through deceptive texts, emails, and unregistered (“ghost”) preparers who file false returns or steal identities. Law enforcement, including the Roseville Police Department, has issued public alerts urging taxpayers to exercise caution and verify preparer credentials.

New IRS Tools and Initiatives Bolster Transparency and Fraud Prevention

To mitigate these challenges, the IRS has launched several new resources and enhancements:

  • The Where’s My Refund? tool now offers projected deposit dates specifically for early filers claiming EITC or ACTC, enhancing transparency around refund timing.

  • The upgraded IRS Individual Online Account consolidates access to balances, payments, notices, and real-time refund status, enabling taxpayers to monitor return progress more effectively.

  • A newly launched webpage dedicated to tax fraud and scam reporting simplifies the process for taxpayers to alert the IRS about suspicious activities, facilitating quicker agency responses.

  • Expanded military-specific guidance and dedicated support channels reduce filing complexities for service members and their families, with clarified instructions on deployment-related credits, service income reporting, and other military tax matters.

  • Educational outreach efforts, such as the IRS’s In Your Corner Podcast (Episode 13: “Tax season made easy: What actually gets you a bigger refund”), demystify complex changes and empower taxpayers.

Special Populations Face Unique Challenges and Supports

Seniors are navigating particular complexities this season:

  • Retroactive Social Security tax adjustments require some to file amended returns, sometimes resulting in unexpected tax liabilities.
  • The redesign of SSA-1099 forms has led to confusion and misreporting, contributing to refund delays and errors.
  • Changes in Social Security payment schedules demand careful income recognition and tax planning.

Seniors are advised to review SSA-1099 forms carefully and seek professional tax assistance to avoid costly mistakes.

Military taxpayers benefit from enhanced IRS support:

  • Clarified deployment-related credit and deduction instructions.
  • Detailed guidance on service-related income reporting.
  • Access to dedicated IRS assistance channels aimed at simplifying tax filing.

Verifying Prior-Year Filings: A Crucial Step to Avoid Refund Delays

A new and critical dimension for taxpayers is verifying that their 2024 tax returns were properly filed and accepted by the IRS, especially as missing or unconfirmed prior-year filings can trigger refund delays or denial in 2025 and beyond.

  • Taxpayers can use the IRS Online Account to confirm the receipt and processing status of prior-year returns.
  • If online verification is unavailable or unclear, taxpayers may contact IRS customer service directly or consult a tax professional for assistance.
  • In cases of missing W-2s or 1099-Rs, submitting Form 4852 (Substitute Wage and Tax Statement) helps prevent delays.
  • Prompt action in verifying prior filings helps avoid extended refund holds or audits in the current season.

Practical Taxpayer Strategies to Maximize Refunds and Minimize Delays

Amid this complex environment, experts recommend:

  • File early and electronically to avoid peak-season backlogs and speed processing.
  • Complete ID.me identity verification promptly to prevent refund holds.
  • Use Form 4852 if wage or retirement income documents are missing or delayed.
  • Respond swiftly to IRS notices requesting identity verification or missing information.
  • Utilize Form 8379 (Injured Spouse Allocation) to protect refunds from offsets due to a spouse’s debts.
  • Regularly monitor refund status via IRS and state portals.
  • Seniors should seek professional guidance on Social Security tax adjustments and form complexities.
  • Military taxpayers should leverage IRS military-specific resources.
  • Taxpayers in nonconforming states should stay alert for legislative updates and prepare for possible amended returns.
  • Remain vigilant against scams by verifying preparer credentials and avoiding suspicious communications.

Who Benefits Most and Who Faces the Biggest Hurdles?

Top beneficiaries include:

  • Families claiming expanded refundable CTC and ACTC.
  • Adoptive parents utilizing the inflation-indexed Adoption Tax Credit.
  • Low- and moderate-income workers benefiting from inflation-indexed EITC and PTC.
  • Eligible hourly employees claiming the QOCD, contingent on employer certification.
  • Seniors and heads of household benefiting from inflation-indexed tax brackets and increased standard deductions.
  • Military personnel accessing enhanced IRS support resources.

Groups facing the greatest challenges include:

  • Taxpayers delayed by PATH Act withholding and ID.me verification backlogs.
  • Hourly workers impacted by QOCD employer certification delays.
  • Seniors grappling with Social Security tax adjustments and SSA-1099 form confusion.
  • Paper filers experiencing extended processing times.
  • Individuals subject to Treasury Offset Program refund seizures.
  • Victims or potential victims of ghost preparer fraud.

Conclusion: Informed, Proactive Engagement is Essential

The 2025–2026 tax seasons mark a rare convergence of historic tax law expansions and persistent operational challenges. While inflation indexing, expanded refundable credits, and the QOCD provide unprecedented refund opportunities, taxpayers must proactively engage with the process—filing early and electronically, completing identity verification, verifying prior-year filings, and monitoring refund status—to avoid delays and maximize benefits.

IRS innovations, including enhanced online tools and dedicated fraud-reporting channels, along with targeted support for seniors and military families, offer hope for smoother filing experiences. Yet, ongoing IRS modernization and evolving state conformity remain critical to restoring taxpayer confidence and improving future tax seasons.

Awareness of fraud schemes and strict adherence to filing best practices will be essential for navigating this transformative tax landscape successfully.

Essential Resources for Taxpayers

By fully understanding the expanded credits, inflation indexing, operational hurdles, fraud-prevention efforts, and the critical need to verify prior-year filings, taxpayers can confidently navigate the transformative 2025–2026 filing season. Proactive, informed engagement remains the key to unlocking maximum benefits while minimizing delays and frustration.

Sources (72)
Updated Feb 26, 2026