California taxpayers could see higher federal tax refunds in 2026. Here’s why
Tax season is in full swing across California — and taxpayers could see larger federal refunds when they file in 2026.
The average tax refund is usually a little more than $3,000.
Refunds could top $4,000 this year because of a “massive tax bill that became law in 2025,” according to financial information site Bankrate.
“This year, several new tax law provisions of the One, Big, Beautiful Bill become effective, which could impact federal taxes, credits and deductions,” the Internal Revenue Service said in a Jan. 8 news release.
The law includes a higher standard deduction, more generous tax brackets and other changes that could lower taxes for some people, Bankrate reported.
Here’s what you need to know:
Which tax laws are changing?
The One Big Beautiful Bill includes several changes to the federal tax code, according to the IRS.
“President (Donald) Trump is committed to the taxpayers of this country and improving upon the successful tax filing season in 2025,” acting IRS Commissioner Scott Bessent said in the Jan. 8 release.
The law makes permanent many provisions that were set to expire under the 2017 tax law, while also adding new temporary and permanent changes, The Sacramento Bee previously reported.
Some of those updates won’t take effect until the 2026 tax year — but others will impact tax returns filed for 2025.
“Prior to the passage of the One, Big, Beautiful Bill, which delivered working families tax cuts, Treasury and IRS were diligently preparing to update forms and processes for the benefit of hardworking Americans,” Bessent said. “I am confident in our ability to deliver results and drive growth for businesses and consumers alike.”
For the 2025 tax year, the law includes permanently larger standard deductions; lower tax brackets; no federal tax on tips or overtime pay; higher credits and deductions for children and the end of the federal electric vehicle tax credit.
How much will federal tax refunds rise?
“Every year, everyone’s tax return, and tax refund, comes out a little different,” Bankrate said in a Jan. 26 report.
This happens because of several factors, including changes in tax laws, annual IRS inflation adjustments and more.
According to the IRS, here’s a look at the average tax refund by year since 2015:
- 2015 — $2,797
- 2016 — $2,860
- 2017 — $2,895
- 2018 — $2,899
- 2019 — $2,869
- 2020 — $2,549
- 2021 — $2,815
- 2022 — $3,252
- 2023 — $3,167
- 2024 — $3,138
- 2025 — $3,167
“All told, the average tax refund could rise by as much as $675 to $1,000 this year for some taxpayers,” Bankrate said.
“Of course, the amount of your tax refund will depend on your specific financial situation and which tax breaks you qualify for,” the financial information site said.
In 2025, the IRS processed roughly 165 million tax returns, issuing about 104 million refunds totaling approximately $328 billion to taxpayers nationwide.
When do I have to file my 2025 tax return?
In California, the deadline to file both state and federal income tax returns for the 2025 tax year is Wednesday, April 15.
Taxpayers who need more time can request a six-month filing extension — but any taxes owed must still be paid by the April deadline to avoid penalties and interest.
When will I get my federal tax refund?
If you file your taxes electronically and choose direct deposit, you can usually expect your refund within about 21 days, as long as your return is complete and error-free, according to the IRS.
Refunds for federal taxes can take more time if you file an amended return or submit your paperwork by mail.
In those cases, processing can take four weeks or longer, the IRS said.
California taxpayers can track a federal refund using the IRS tool Where’s My Refund?
This story was originally published February 6, 2026 at 8:22 AM with the headline "California taxpayers could see higher federal tax refunds in 2026. Here’s why."
