The U.S. Treasury Department reports that midway through the 2026 tax filing season, more than 63.5 million tax returns have been processed, with the average refund exceeding $3,700—a 10.2 percent increase from the prior year.
Nearly 45 percent of filers, or over 27.5 million taxpayers, have claimed at least one of President Donald Trump’s new Working Families Tax Cuts, including provisions eliminating taxes on tips and overtime pay, while over 800,000 children have qualified for the $1,000 pilot contribution to new “Trump Accounts” savings vehicles.
Tax Filing Season Progress and Refund Data
Processing Statistics
As of March 8, 2026, the Internal Revenue Service has processed approximately 63.5 million individual income tax returns, representing about 45 percent of the total expected by the April 15 filing deadline. Total refunds issued amount to more than $109 billion, with the average refund reaching $3,804—up 10.2 percent from $3,453 in the prior year.
Direct deposit refunds average $3,809, reflecting the continued shift toward electronic payments following Executive Order 14247, which began phasing out paper refund checks on September 30, 2025. Treasury Secretary Scott Bessent stated that “Treasury and the IRS have worked tirelessly to ensure that relief was delivered efficiently, securely, and on time.”
Working Families Tax Cuts: Key Provisions and Uptake
No Tax on Tips and Overtime
The Working Families Tax Cuts, enacted as part of the One Big Beautiful Bill Act on July 4, 2025, introduced several new deductions designed to increase take-home pay for working Americans. The “No Tax on Tips” provision allows employees and self-employed individuals to deduct up to $25,000 annually in qualified tips received in occupations where tipping is customary. So far, over 3.5 million returns have claimed this benefit.
The “No Tax on Overtime” provision permits individuals to deduct the portion of qualified overtime pay that exceeds their regular rate—effectively the “half” portion of time-and-a-half pay—up to $12,500 annually ($25,000 for joint filers). This has become the most widely claimed new benefit, with approximately 15.5 million returns utilizing the deduction. Both provisions phase out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers).
Enhanced Senior Deduction
More than 9.2 million returns have claimed the Enhanced Deduction for Seniors, which provides individuals age 65 and older an additional $6,000 deduction on top of the standard deduction. For married couples where both spouses qualify, the additional deduction reaches $12,000. This benefit applies to tax years 2025 through 2028 and phases out for taxpayers with modified adjusted gross income over $75,000 ($150,000 for joint filers).
Car Loan Interest Deduction
The “No Tax on Car Loan Interest” provision allows individuals to deduct up to $10,000 annually in interest paid on loans used to purchase qualified vehicles that underwent final assembly in the United States. Approximately 690,000 returns have claimed this deduction so far. To qualify, loans must have originated after December 31, 2024, and the vehicle’s vehicle identification number must be included on the return.
Trump Accounts: New Savings Initiative for Children
Program Structure
The One Big Beautiful Bill Act created Trump Accounts—tax-deferred Individual Retirement Accounts designed to provide children with a financial head start. Any child under age 18 with a Social Security Number is eligible to have an account opened on their behalf.
A pilot program provides a one-time $1,000 contribution from the U.S. Treasury for children who are U.S. citizens born between 2025 and 2028. As of March 8, nearly 3.5 million Trump Accounts have been opened, with more than 800,000 qualifying for the $1,000 pilot contribution.
Contribution Limits and Sources
Individual contributions by parents, grandparents, or others are limited to $5,000 annually per child. Employer contributions of up to $2,500 annually count against this individual limit. Tax-exempt organizations and government entities may make additional contributions without annual dollar limits, and these do not count against the $5,000 individual limit.
Notably, the Michael and Susan Dell Foundation has committed $6.25 billion to fund Trump Accounts, providing $250 for 25 million U.S. citizen children age 10 and under living in zip codes with median incomes below $150,000.
Investment and Distribution Rules
Trump Account funds must be invested in low-cost mutual funds or ETFs that track the S&P 500 or another qualified index consisting primarily of U.S. company stocks. Investment fees and expenses cannot exceed 0.1 percent.
Accounts cannot be withdrawn from until the calendar year the child turns age 18, with no hardship exceptions. At age 18, the accounts become subject to normal traditional IRA rules and can be converted to Roth IRAs. According to TrumpAccounts.gov projections, the $1,000 Treasury contribution alone could grow to $6,000 by age 18 and $15,000 by age 27, assuming historical S&P 500 averages.
Establishment Process
Trump Accounts are established using IRS Form 4547, which can be filed with a tax return or submitted online at TrumpAccounts.gov. The parent, guardian, or other authorized individual who establishes the account serves as the responsible party. While initial accounts must be established with U.S. Treasury-selected trustees, accounts can later be transferred to other qualified IRA custodians that meet extensive reporting and administration requirements.
Implementation and IRS Operations
Guidance and Forms Development
The IRS has created 26 guidance documents related to the Working Families Tax Cuts, including notices, revenue procedures, and frequently asked questions. More than 700 forms, instructions, and publications were updated for the 2026 filing season, including approximately 160 affected by the new legislation. A centralized resource page is available at www.irs.gov/one-big-beautiful-bill-provisions.
State Conformity Considerations
States are addressing conformity with the One Big Beautiful Bill Act in various ways. Some, like Idaho and West Virginia, propose full conformity, while others such as New York and Connecticut propose decoupling from certain provisions. California has announced it will not recognize Trump Accounts as IRA contributions for state tax purposes, instead treating them as taxable accounts where earnings will be taxed annually.
FAQ: Trump Tax Cuts and Trump Accounts
Q: What are the most claimed new tax benefits so far in 2026?
A: The “No Tax on Overtime” provision leads with approximately 15.5 million claims, followed by the Enhanced Deduction for Seniors with over 9.2 million claims, “No Tax on Tips” with more than 3.5 million claims, and the car loan interest deduction with about 690,000 claims.
Q: How do the new tax provisions phase out based on income?
A: The “No Tax on Tips” and “No Tax on Overtime” deductions phase out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers). The Enhanced Deduction for Seniors phases out above $75,000 ($150,000 for joint filers), and the car loan interest deduction phases out above $100,000 ($200,000 for joint filers).
Q: How much can be contributed to a Trump Account?
A: The U.S. Treasury provides a one-time $1,000 contribution for eligible children born 2025-2028. Individual contributions from parents, grandparents, or others are limited to $5,000 annually, which can include up to $2,500 in employer contributions. Tax-exempt organizations and government entities can make additional contributions without annual dollar limits.
Q: When can Trump Account funds be withdrawn?
A: Distributions are generally not permitted before the calendar year the beneficiary turns age 18, with no hardship exceptions. At age 18, the accounts become subject to normal traditional IRA rules and can be converted to Roth IRAs.
Q: What is the average tax refund amount for 2026?
A: The average refund exceeds $3,700, with direct deposit refunds averaging $3,809—a 10.2 percent increase from the prior year.
