The short answer
How is a tax refund calculated?
Your refund is the federal tax your employer withheld during 2026, plus any refundable credits, minus the tax you actually owe for the year. A single filer with $55,000 of wages owes $4,420 in 2026 federal income tax after the $16,100 standard deduction. If $5,500 was withheld, the refund is about $1,080.
2026 returns are filed in early 2027. The IRS says most refunds for electronically filed returns with direct deposit arrive within 21 days.
Example refunds for tax year 2026
| Household | Wages | Withheld | Tax after credits | Refund |
|---|---|---|---|---|
| Single, no children | $55,000 | $5,500 | $4,420 | $1,080 |
| Single, no children | $80,000 | $10,000 | $8,770 | $1,230 |
| Married, 2 children | $90,000 | $6,000 | $2,040 | $3,960 |
| Married, 1 child | $140,000 | $15,000 | $10,940 | $4,060 |
| Head of household, 2 children | $30,000 | $900 | $-3,400 | $4,300 |
| Head of household, 1 child | $55,000 | $3,500 | $1,148 | $2,352 |
Standard deduction; child tax credit included; earned income tax credit not included (it would add to the refunds of the lower-income households).
What changed for 2026 returns
- Standard deduction: $16,100 single, $32,200 married filing jointly, $24,150 head of household. People 65 or older add $2,050 (single) or $1,650 each (married).
- Child tax credit: up to $2,200 per child under 17, of which up to $1,700 is refundable for families with earned income above $2,500. It phases out above $200,000 of income ($400,000 joint).
- No tax on tips: up to $25,000 of qualified tips can be deducted, reduced above $150,000 of income ($300,000 joint).
- No tax on overtime: the premium part of overtime pay (the extra half in time-and-a-half) can be deducted, up to $12,500 ($25,000 joint), with the same phase-out.
- Senior deduction: an extra $6,000 per person aged 65 or older, reduced by 6% of income above $75,000 ($150,000 joint).
The tips, overtime and senior deductions apply for 2025 through 2028 and can be claimed whether or not you itemize.
Why refunds are bigger or smaller than expected
- Withholding changes: a new W-4, a second job or a raise changes how much was taken from each paycheck.
- Bonuses: bonuses are usually withheld at a flat 22%. If your bracket is lower, that extra comes back as refund.
- Credits: a child turning 17 during the year loses eligibility for the child tax credit.
- Side income: freelance or gig income has no withholding, so tax on it reduces your refund or creates a balance due.
A big refund means you overpaid during the year. If you would rather have the money in each paycheck, adjust your W-4 with your employer.
Sources
IRS: tax year 2026 inflation adjustments (Rev. Proc. 2025-32), IRS: One, Big, Beautiful Bill provisions and IRS: refunds. This is an estimate, not tax advice; use IRS Free File or a tax professional to prepare your return.
Frequently asked questions
How do I estimate my tax refund?
Work out your tax for the year (income minus deductions, taxed at the 2026 brackets, minus credits), then subtract it from the federal tax withheld shown in box 2 of your W-2. A positive result is a refund.
When will I get my 2026 tax refund?
The IRS says most refunds for e-filed returns with direct deposit are issued within 21 days. Refunds that include the earned income tax credit or additional child tax credit cannot be issued before mid-February by law.
How much is the child tax credit for 2026?
Up to $2,200 per child under 17. Up to $1,700 per child is refundable, so it can increase your refund even if you owe no tax.
Is overtime tax-free in 2026?
Not entirely. You can deduct the premium part of overtime pay (the extra half in time-and-a-half), up to $12,500 or $25,000 for joint filers. Social Security and Medicare tax still apply.
Are tips tax-free in 2026?
Up to $25,000 of qualified tips can be deducted from federal income tax for 2025 through 2028, with a phase-out above $150,000 of income ($300,000 joint).
Why is my refund smaller this year?
Common reasons are less withholding after a W-4 change, higher income, a child aging out of the child tax credit, or untaxed side income.