Why Homeowners Might See Bigger Federal Tax Refunds in 2026

Tax season is just around the corner, and for many homeowners, this year could come with a pleasant surprise: larger federal tax refunds than usual, possibly around $1,000 more on average than last year. What’s behind this boost, and who will benefit most? Let’s break it down according to realtor.com.

What’s Driving Bigger Refunds?

Several recent changes in federal tax law are stacking up in favor of taxpayers — especially homeowners:

Expanded SALT Deduction

One of the biggest changes this year is the significant increase to the state and local tax (SALT) deduction cap. Previously capped at $10,000, the limit has now been raised to $40,000 for married couples filing jointly (and $20,000 for separate filers). This gives homeowners in high-tax states a much bigger deduction and that can translate to a larger refund when you file.

Over-Withheld Taxes Return to You

Because the IRS didn’t update withholding tables after the tax law changes, many workers had too much tax taken out of their paychecks in 2025. Come filing season in spring 2026, the excess gets refunded in one lump sum.

Standard Deduction Increase

The standard deduction also ticked up modestly for the 2025 filing year, meaning most taxpayers keep more of their income — and that contributes, in part, to a larger refund across the board.

Who Sees the Biggest Gains?

Not everyone will see the full $1,000 boost, and it varies widely based on your personal tax situation:

• Homeowners in high-tax states (like New York, New Jersey, or California) who previously hit the old $10,000 SALT limit stand to benefit the most from the expanded cap.

• Households that itemize deductions may see a larger refund if property taxes and state income taxes now exceed the standard deduction.

• For many middle-income homeowners, the actual increase will depend on everything from mortgage interest to how much you paid in SALT during the year.

What to Keep in Mind

Before you file, take time to gather all your tax documents. Whether you choose to itemize or take the standard deduction can make a real difference in how much you get back. If your finances are complex, a quick conversation with a CPA might be worth the peace of mind.

This year’s tax season isn’t just about refunds, it’s about understanding how recent tax changes affect real money in your pocket. For many homeowners, that knowledge could translate to thousands more back in their hands this spring.