Tax Refund Surge Ahead — These People Will Get the Biggest Refunds!

I just want to give you a heads up that a tax refund surge is coming. There are preliminary estimates which we're going to get into, but I can confirm that what they're saying is true. So in today's video, I'm going to explain to you what happened. Okay, let's begin here. President Trump's one big beautiful bill that passed in July changes our taxes in a massive way for a lot of people. So we're talking about, this is going to be for 2025, the tax refund that you're going to see on your tax filing in early 2026, so just a few months away. Now, this was the biggest tax overhaul since 2017. Now, according to JP Morgan's forecast, they expect that the average tax refund is going to be $3,743 in this upcoming tax filing season, which is about $500 more than last year or 15% higher. But of course, you have to keep in mind that we're talking about averages here. So you may get more or less than the average, but with the new changes, most people can expect a bigger tax refund. Okay, now I want to answer this question because this is very important for you to understand what's going on. So why is this going to happen? You have to first understand what a tax refund really is. A tax refund just means that you sent in more taxes than you should have and you're getting refunded your overpayments. So for example, on each one of your paychecks, if your employer has been taking out, let's just say $200 for taxes on each paycheck, that $200 that they take out is just an estimate. And when you do your tax return and you find out that you should have only been sending in $150 per paycheck, you know, not $200, then you sent in too much money and you're going to get refunded your overpayments in the form of a tax refund. Okay, so with that being said, why is President Trump's OBBB, one big beautiful bill, going to cause larger tax refunds? It's because his new bill created new tax deductions. So these new tax deductions backdate and begin on January 1st of 2025, at least for most of them. But I want you to just, I want you to think about that logically. So this is the situation. People and payroll systems have been sending in taxes and they haven't been accounting for the new tax changes, you know, the new tax deductions, which is of course nobody's fault because they weren't passed into law until July of this year. I just want to give you more clarity on the situation. So I drew up this example. So we're going to pretend, again, we're just pretending that your payroll system takes out the appropriate amount of taxes from each one of your paychecks. Okay? So let's just say you worked overtime every month from January to July of this year. Now, before the passage of the OBBB, so under the old tax rules, let's just say from January to July on your overtime work, you're going to owe $2,000 in taxes. So $2,000 was, $2,000 were withheld from your paycheck, you know, the appropriate amount. Now after the passage of the OBBB, part of overtime is going to be tax-free. So there's, you know, new tax deductions or the tax laws changed. So from January to July, you're going to owe under these new laws $1,500 in taxes, but $2,000 was withheld from your paycheck. So in this situation, you're going to get the $500 overpayment refunded back to you. Therefore, a lot of people are going to be in for a pleasant surprise when they file their tax return. Again, I just want to say that this is nobody's fault because the payroll systems were taking out the appropriate amount of taxes according to the old tax laws. But the new tax laws lowered taxes for the whole year. Therefore, if any of these tax deductions, which I'm going to show you, if they apply to you, then you can expect your tax refund for this year to be inflated. Now let's run through some of the taxpayers that can expect a larger tax refund. So we're going to begin with seniors because they're going to get an extra standard deduction, like an additional amount. So if you're 65 years or older, on or before December 31st, so by the end of this year, then the standard deduction for you is going to increase by $6,000. As a single taxpayer, if you're married, filing jointly, then the standard deduction is going to increase. It's an additional amount of $12,000. Another group of people that are going to be affected by this will be tipped employees because of the no tax on tips. So the new tax deduction will allow a maximum tax deduction of $25,000. So you lose the maximum allowable deduction once your income surpasses these thresholds. So if your income as a single person is above $150,000 or married filing jointly above $300,000. And I just want to emphasize, because this is very important, because not everybody itemizes their tax deductions. So this is not going to be an itemized deduction. So in other words, if you take the standard deduction, you still qualify for this. And I thought that this chart was very helpful for the no tax on tips. So this is from the Bipartisan Policy Center. So the blue line represents single taxpayers and the red line represents married filing jointly taxpayers. So again, this is no tax on tips. $25,000 is the maximum tax deduction that you can claim on your tax return, whether you're filing single or married. But let's just say that you make $300,000 as a single person, which is the blue line. So in that case, you're over the income limits to qualify for the full deduction. And your deduction is going to be limited to about $10,000. But if you're married filing jointly, which is the red line, and you make $300,000 a year combined, then you're still going to qualify for the full deduction, the $25,000. But once your income gets to $400,000 as a single person or $550,000 as married filing jointly, then you're no longer going to be eligible for this tax deduction. Another group of people that will be affected will be people with overtime compensation because of the no tax on overtime pay. So the maximum tax deduction is going to be, if you're single, $12,500. If you're married filing jointly, your max deduction is going to be $25,000. Now, I just want to give you an example because a lot of people are unclear about how this is going to work. And in this example, we're going to use an hourly wage that's just a nice clean number to work with. So let's just say that your hourly wage is $100 an hour. So if that's the case, then your overtime pay is going to be $150 an hour, right? Okay, but here's the thing. If your overtime pays $150 an hour, only 50 of that, so 50 of that 150 is going to be tax-free. So only half in the time and a half is going to be tax-free. And the entire amounts of the $150 in this example, the full $150 an hour is going to be subject to Social Security and Medicare taxes. So this tax-free thing, it's only going to be applicable to your federal income taxes and also not to your state income taxes if that applies to you. And I just want to give you these additional details. You're going to lose the maximum allowable deduction amounts once your income surpasses these thresholds. So if you're single, the threshold is going to be $150,000 of income. Married filing jointly is going to be $300,000. And again, for this one also, it's not going to be an itemized deduction. So again, if you use a standard deduction, you're still going to be able to take advantage of this. And I just want to give you a fun fact that 60% of Americans work in occupations that are eligible for overtime pay. Now moving on to this affected group, which will be residents of high income tax states because of the modifications to the SALT deductions. So the maximum tax deduction is increased from $10,000 to $40,000, which is a big jump up, of course. Now what are SALT deductions? There's a lot of components within the SALT deductions, but the biggest ones are going to be, and it's going to be the sum of these state income taxes that you paid in, locality taxes, and property taxes. Moving on to the next group. If you have qualifying children, then you're going to be affected because of the increase to the child tax credits. The old law was $2,000 per child. The new law is now $2,200 per child. For full eligibility, your income must be under single filers $200,000, married filing jointly filers $400,000. And here's the last one that I'm going to throw out there. The car loan interest deduction. If you buy an American assembled car, the interest on your auto loan is now tax deductible. But you have to qualify, of course, and here are the details. The maximum annual deduction is going to be $10,000. Final assembly of the vehicle must be in the USA. Okay, so for this one again, just like the other ones, you don't have to itemize your tax deduction. So if you take the standard deduction, then you can claim this one as well, which just means that more people will be eligible. Okay, the auto loan must have originated on January 1st of 2025 or after, so anytime in 2025. And the deduction phases out after these are the income limits, $100,000 as a single filer, $200,000 of income as a joint filer. And this is going to be applicable to new vehicles. So used vehicles are not going to qualify. Anyways, as you can see, these new tax deductions are going to affect millions of Americans and the expectation is a tax refund surge. And my assessment is that I agree. Now regarding the economic impact of these larger tax refunds, it is expected to spur economic activity and boost GDP by an extra 0.5% in Q1 of 2026. And again, I agree because if you think about it, we're talking about an additional $500 average tax refund for 117 million tax refunds. So it's basically like a mini stimulus check that's going to boost the economy. You know, I don't know how Q4 of this year, Q4 2025 is going to look, but Q1 of 2026 is going to get a meaningful bump by this whole situation. Okay, now I want to end with this. You can expect larger paychecks in 2026, so next year, compared to this year in 2025. Or in other words, your take-home pay is going to increase next year because these new tax rules are going to lower your taxes and the IRS tax tables and payroll systems are going to reflect that accordingly and appropriately next year in your paycheck calculations. Okay, but that means that the following tax filing season, so the one that you're going to file in 2027, you should expect the smaller tax refunds in 2027 compared to 2026. So listen, I just want to say that if you happen to remember this talk, this little talk of ours that we're having right now, if you remember 18 months from now, then you're not going to be confused as to why your tax refunds shrank in 2027 compared to 2026. Which is of course because your 2026 tax refunds was just artificially inflated because the whole backdating of tax deductions. Well, I just wanted to give you a heads up and a lot of people are going to be in for a pleasant surprise. Please subscribe, I'll keep you updated on this whole situation. Thank you so much, appreciate the support, and wish you a very nice day. Take care.