2026 Tax Season Set to Deliver Major Refunds as Surprise Economic Stimulus

The Unexpected Windfall Coming Your Way

A fresh analysis from JPMorgan Asset Management has flagged something most taxpayers haven’t realized yet: the 2026 tax filing season could deliver massive refunds that function almost identically to the pandemic stimulus checks that reshaped consumer behavior back in 2020-2021.

The reason? A perfect storm of policy changes colliding with IRS administrative delays. When sweeping tax legislation took effect, many provisions were made retroactive to January 2025—meaning they applied to income already earned. Yet employers never received instructions to adjust payroll withholdings mid-year. The result: millions of people have been paying taxes on income that’s no longer taxable under current law.

The Numbers Tell the Story

David Kelly, chief global strategist at JPMorgan Asset Management, crunched the data and the projections are staggering. The IRS is expected to process around 166 million individual income tax returns for the 2025 tax year. Of those, approximately 104 million filers should receive refunds, with an average check totaling $3,278.

That’s nearly $340 billion flowing back into consumer pockets over a concentrated period—comparable in scale to the direct stimulus payments of 2020-2021. Is there a stimulus check for 2025 tax filers? Not directly, but the delayed refunds from that year will arrive with stimulus-like economic impact in early 2026.

What Changed in the Tax Code

The retroactive provisions eliminating taxation on tips and overtime income represent the biggest shift, along with expanded deductions for car loan interest and a new bonus for retirees. The standard deduction jumped permanently, as did the child tax credit. State and local tax deduction limits also increased.

These changes should trigger substantial refunds, but they won’t appear on 2026 paychecks because withholding tables never updated to reflect them. Taxpayers continued paying 2024-style amounts throughout 2025, leaving them significantly overpaid.

The Economic Ripple Effect

Kelly warned that this influx of refunds “will function much like a new round of stimulus payments, injecting consumer spending power and likely fueling inflation pressures in early 2026.” That’s not necessarily positive. The last round of stimulus contributed materially to post-pandemic inflation. A similar surge in demand could strain an economy already dealing with tariff impacts and tight labor market conditions.

The Federal Reserve may reconsider its rate-cutting trajectory if inflation re-accelerates. Additionally, Kelly speculated that lawmakers could introduce further direct payments—potentially tariff rebates or “DOGE dividends”—to shore up economic activity in the second half of 2026 before elections.

What This Means for Your Planning

While receiving thousands of dollars in unexpected refunds sounds appealing, the broader economic consequences deserve consideration. Large refund seasons historically precede periods of elevated consumer prices and reduced purchasing power. What feels like a win in spring 2026 could contribute to higher costs later in the year and beyond.

For now, taxpayers should prepare for larger-than-expected refunds when filing returns in early 2026 for their 2025 income—and recognize this as an involuntary “stimulus” driven by administrative timing rather than intentional policy support.