Those provisions reduced individual income taxes by $144 billion in 2025<\/a>, according to estimates from the Tax Foundation. <\/p>\n “Overall, we’re expecting these changes to increase refunds<\/a> by 15% to 20% on average,” Heather Berger, a U.S. economist with Morgan Stanley, said on the company’s “Thoughts on the Market” podcast on Jan. 2.\u00a0<\/p>\n In 2025, the average refund <\/a>for individual filers was $3,052 through Oct. 17, according to the IRS. The agency issued about 102 million refunds<\/a> through Oct. 17, with about 60% of payments sent<\/a> through March 28.<\/p>\n Bigger refunds could boost spending <\/p>\n For 2026, bigger refunds could temporarily increase consumer spending<\/a>, according to some experts. <\/p>\n “Our expectation is it would be a positive for consumption,” National Economic Council Director Kevin Hassett told CNBC’s “Squawk on the Street”<\/a> on Jan. 9.\u00a0 <\/p>\n But spending behavior varies by earnings, with higher-income households more likely to save refunds, according to an Oct. 31 note from Piper Sandler. Typically, households making between $30,000 to $60,000 spend about 30% of refunds on discretionary purchases, compared to 15% for households earning $100,000 or more, the note said.<\/p>\n Some analysts have said that bigger tax refunds in early 2026 could boost consumer demand and inflation pressure<\/a>.<\/p>\n “It could easily be inflationary,” said Jonathan Parker, an economist at the Massachusetts Institute of Technology, who has researched<\/a> consumer spending during past stimulus payment cycles.<\/p>\n The stimulus checks<\/a> issued during the Covid-19 pandemic were “certainly correlated” with higher inflation, Parker told CNBC. Issued in 2020 and 2021, these payments were a “contributing factor” to the size of the subsequent inflation boom, he said. <\/p>\n The consumer price index rose 9.1%<\/a> from the previous year in June 2022, which marked the fastest pace for inflation since November 1981. <\/p>\n Former Treasury Secretary Janet Yellen<\/a> in January 2025 said stimulus spending may have contributed “a little bit” to inflation<\/a>. But there were also “huge supply chain problems,” which caused shortages on key goods, she said.\u00a0\u00a0<\/p>\n![\"Building](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2026\/01\/1768733135_103_108250497-6ED1-REQ-010926-Epperson.jpg\")
How bigger tax refunds could impact inflation <\/p>\n