Bigger IRS refunds sound good — here’s why they may signal a problem

Tax Refund 2026: The average IRS tax refund reached $3,742 in the 2026 tax filing season, more than 10% higher than last year. That sounds like good news. But experts warn it signals tax overpayment. Changes from the One Big Beautiful Bill Act and outdated IRS withholding tables caused workers to pay extra tax. The refund simply returns that money. Financial planners say adjusting tax withholding and W-4 forms can improve monthly cash flow and personal finance planning.