Some American taxpayers could face an unwelcome surprise this filing season — key details

Some Americans may see smaller refunds this year compared to the past few years.

PUBLISHED 2 HOURS AGO

A woman talking to a tax preparation specialist. (Representative Cover Image Source: Getty Images | Joe Raedle)

With the new tax season beginning in January, some officials have repeatedly claimed that many Americans could see unusually larger tax refunds this year. These changes are tied to the One Big Beautiful Bill Act signed by President Donald Trump, and may be good news for families who were looking for ways to get some savings or earn extra income for their major expenses in the midst of an affordability crisis. However, in recent news, it has been revealed that some may also see smaller refunds this time when compared to the last few years. It's important to note that the amount is based on the specific financial situation of each individual.

People helping with taxes | Getty Images | Photo by Justin Sullivan — A person seeking help with tax filing. (Representative Image Source: Getty Images | Justin Sullivan)

As reported by Newsweek, refunds may shrink for people whose income increased last year, along with those juggling more than one job and parents whose children are no longer eligible for the child tax credit. The list also includes people who don’t qualify for new deductions related to policies backed by Trump, such as those related to tips, overtime pay, or car loan interest. Apart from this, taxpayers who recently sold a home, owe past-due child support, student loans, or other government debts, as well as people who went through major life changes like getting married or switching filing status, may also receive less tax refunds.

Representative Image of the Internal Revenue Service (IRS) building | Getty Images | Photo by Zach Gibson

Kevin Thompson, the chief executive of 9i Capital Group, explained that taxpayers who earn an income from several sources are often the ones who feel the biggest impact. He said, "One of the most common issues I see is uncoordinated withholdings: people forget to inform their employer that they have a side hustle, freelance income, or even a second job. As a result, not enough tax is withheld throughout the year, leading to a higher bill when they file. It often becomes clear when we ask a simple question: 'Did you update your W-4?'"

A tax preparation specialist is helping a man. (Representative Image Source: Getty Images | Justin Sullivan)

Alex Beene, a financial literacy instructor at the University of Tennessee, also had a similar view, as he said, "As much as side-hustling and multiple jobs are discussed in our current economy, those scenarios can cause more headaches and potentially lower refunds at tax time." He then explained his point further, saying, "The problem is, while most jobs do withhold taxable portions of your income, they don't always factor into that withholding your other sources of work that could boost your income into a new bracket. The result could be a lower refund." So, if you're someone who has more than one job, Beene advises you to review and adjust how much tax is taken out of your pay. Doing so can help reduce the risk of owing a larger bill while filing.

A countdown urging people to file their taxes (Source: GettyImages | Justin Sullivan Staff)

Another noteworthy aspect is that American households earning roughly between $60,000 and $400,000 are expected to see the biggest refunds, as these income groups will gain the most from broader deductions and a higher cap on state and local taxes. In December, during one of his speeches, President Trump said, “Next spring is projected to be the largest tax refund season of all time,” as reported by CNBC. The remarks were made at a time when Trump was facing declining public support over concerns about rising prices and the cost of living.