Trump economist forecasts record tax refunds as IRS outlines 2025–28 changes

WASHINGTON — Americans could see what officials describe as the largest tax refund season in U.S. history, with refunds potentially reaching as high as $20,000 for some households, according to Kevin Hassett, director of the White House National Economic Council. Hassett, a leading figure in policy discussions and a potential candidate for the next Federal Reserve chair, told Fox Business as the tax-filing season approaches that refunds may hit unprecedented levels. The remarks come as households prepare documents and lawmakers push tax policy changes enacted in the One Big Beautiful Bill.

Hassett said the size of refunds could be driven by changes from the administration’s tax policy that are not yet reflected in early filings. He cited wage growth and cooling inflation as factors supporting a favorable take-home effect for workers. In his view, the combination of wage gains and policy shifts could translate into real gains in pay for many households. He noted that wages for the typical worker have risen about 3.7 percent, and with a near 1.6 percent core inflation rate, real wages could be up roughly 2 to 2.5 percent. He argued that blue-collar workers have already seen an approximate $2,000 raise after adjusting for inflation and that the current tax changes could further boost after-tax income when reflected in refunds and paychecks.

Trump has echoed the sentiment, suggesting that families could save anywhere from $11,000 to $20,000 a year under his tax policies. Hassett framed the outlook as favorable for household finances, arguing that the current trajectory—supported by supply-side policy emphasis—could be visible in lower inflation and higher real wages. He compared the present moment to benchmarks from Trump’s first term, underscoring a belief that strong growth can be compatible with restrained price increases as policies mature. Hassett also highlighted a recent inflation report described as blockbuster by proponents, arguing that aggressive supply-side actions can continue to keep prices in check over time.

The upbeat tone sits alongside broader consumer sentiment data. A Fox News poll cited in Hassett’s remarks showed persistent concerns among Americans, with about 44 percent saying they are falling behind financially and roughly 74 percent rating the economy as bad or not so good. Hassett acknowledged the mixed signals from the survey but maintained that the macro backdrop supports a favorable wallet effect for workers as the tax code changes roll out and as inflation trends soften.

Separately, the Internal Revenue Service issued guidance detailing changes tied to the One Big Beautiful Bill for tax years 2025 through 2028. Among the notable provisions, qualifying seniors can deduct an additional $6,000 from taxable income, although the benefit phases out for higher earners, with the phase-out threshold starting at $75,000 of income for single filers. Other changes include no tax on tips, overtime, and car loan interest, which could meaningfully reduce taxable income for many workers. However, some jurisdictions, including Washington, D.C., have opted out of certain provisions, meaning residents there will not benefit from all changes.

The IRS guidance also indicated that employers will not face penalties for separate overtime or tip reporting in 2025 if standard reporting requirements are met. For workers with qualified tips, new deductions will be available from 2025 through 2028, affecting an estimated six million tipped workers. The determination outlines that a cap applies to these deductions, with a maximum of $25,000 for single filers earning over $150,000 and joint filers over $300,000 for the broader change. In addition, the OBBB bill allows no tax on overtime for the 2025–2028 window, and eligible workers can deduct overtime pay above their regular rate, with a separate cap of $12,500 for single filers and $25,000 for joint filers at the same income thresholds. The combined provisions are designed to lift after-tax incomes for workers across several categories, though the impact will vary by filing status and income level.

The IRS cautioned taxpayers to avoid common deduction mistakes that could trigger audits and urged careful reporting of overtime pay to ensure compliance. The guidance also indicated that changes related to the One Big Beautiful Bill are not uniformly adopted across all states and jurisdictions, creating a patchwork of effects that taxpayers will need to navigate when filing 2025 returns.

Beyond the immediate filing season, Hassett’s remarks feed into ongoing commercial and policy debates about the trajectory of the U.S. economy. Supporters of the administration’s approach argue that targeted tax relief and pro-growth policies support real income gains and can moderate price pressures through improved supply conditions. Critics caution that benefits may vary and that tax changes may take time to fully materialize in payroll and refund patterns. Analysts also watch the potential political implications as discussions about the Fed chair appointment and broader fiscal policy continue to unfold.

In the near term, households preparing 2024 filings should anticipate a mix of outcomes driven by the One Big Beautiful Bill and the timing of refunds, with some observers noting that refunds could be larger than in recent years for many filers, while others could see smaller gains depending on individual income, withholding elections, and state conformity on the new provisions. The IRS guidance provides a framework for taxpayers to plan, but the ultimate refunds and tax liabilities will depend on a combination of federal rules, state rules, and personal financial circumstances. Analysts stress that consumers should remain attentive to inflation dynamics and wage trends, which will influence the real-world impact of the policy changes in the months ahead.