Wolfe Research expects higher U.S. tax refunds and ‘material tailwinds’

Investing.com -- U.S. taxpayers, particularly households earning under $200,000, are set to receive meaningfully larger refunds this season, according to Wolfe Research, which said it expects “material tailwinds to tax refunds in the 2026 filing season that begins January 26th.”

Wolfe Research analyst Chris Senyek said in a note this week that the IRS did not update withholding tables after the passage of the OBBB in mid-2025, meaning “nearly all the calendar tax year 2025 stimulus benefits should be received via 2026 tax refunds.”

The firm estimates an incremental $75 billion in refunds for sub-$200,000 income households, or “~$500 per <$200K tax filing.”

For those earning $200,000 to $500,000, “incremental SALT benefits… could result in an additional ~$20B (~$2K on average) in refunds.”

The filing season opens January 26, with the largest volume of refunds historically occurring after February 15 due to rules governing refundable credits.

Wolfe stated it expects the season to follow a “normal schedule,” adding that the week of February 15 “usually” sees the biggest payouts because of the Child Tax Credit and Earned Income Tax Credit.

Looking ahead, Wolfe Research noted that “2026 tax and withholding brackets for lower incomes have increased ~4% and 5 to 7%, respectively,” which may further lift take-home pay.

The note also highlights additional savings opportunities for some taxpayers, including the reinstated $20,000 Form 1099-K reporting threshold and the fact that “there is no wash sale rule for cryptocurrency.”

The firm’s “Tax Refund Basket,” which includes TJX, Carvana, O’Reilly, Walmart, Costco and others, is expected to benefit most from increased lower-income consumer spending.

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