The tax policy changes enacted in the One Big Beautiful Bill Act (OBBBA) will generate a sizable boost to households' tax refunds in the 2026 filing season, according to Wells Fargo economists Michael Pugliese and Shannon Grein.
Specifically, they look for the average refund size to increase to $3,750, an increase of 18 percent from last year.
The economists said the 2026 fiscal tailwind to households from OBBBA's tax cuts does not stop at larger refunds, with lower annual tax payments for some households and withholding table adjustments for future paychecks.
They estimate the total reduction in household income taxes in 2026 from OBBBA's new provisions will be roughly $220 billion, or 0.7 percent of GDP.
“We ultimately expect the reduction in household income taxes to boost consumer spending by roughly $90 billion this year,” they said in a Jan. 13, 2026, special commentary.
They added this translates to a boost of around 0.3 percent to 2026 GDP, “something we've previously factored into our baseline economic forecast.”
The economists said the fiscal tailwind described above is one factor that gives them confidence in their above-consensus view on economic growth in 2026.
“It also should give the FOMC some confidence that, if the labor market can remain resilient a bit longer, the cumulative impact of fiscal stimulus, monetary policy easing and less restrictive trade policy should drive some labor market stabilization come the spring/summer,” they said.
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