Bigger IRS Refunds Set To Boost Spending In 2026

As the 2026 tax filing season swings into full gear, millions of Americans are eyeing a potential windfall: IRS refunds that could be about $1,000 higher per household than in previous years. According to reporting on new provisions and IRS statements cited by Meyka AI PTY LTD, expanded 2025 tax breaks and unchanged paycheck withholding are likely to produce larger refunds for many filers. With the IRS now accepting returns for the 2025 tax year, the agency says most e-filed returns with direct deposit are paid within about 21 days, concentrating a surge of cash into late February and March.

This year’s larger and faster refunds may prove to be more than just a pleasant surprise for taxpayers. As Meyka AI PTY LTD reports, the influx of cash can have a ripple effect across the broader economy, boosting weekly consumer spending—especially for families with pent-up needs. Historically, many households use their refunds for near-term purchases like apparel, electronics, dining, and travel. This behavior tends to benefit consumer discretionary companies and payment networks, which could see a noticeable bump in sales as refund dollars hit bank accounts.

The S&P 500, which was hovering near 6,978 on January 28, 2026, is already showing signs of moderate buying pressure. Technical indicators such as a positive MACD histogram and a Money Flow Index at 66.73 suggest that investors are anticipating a late-Q1 spending pulse. If refund-driven demand lifts sales, especially among lagging retail and travel names, it could help stabilize sectors that struggled earlier in the year. Large retailers’ guidance in the coming weeks will be closely watched to determine whether the anticipated refund dollars are indeed translating into higher ticket sizes and increased store traffic.

But while the prospect of bigger refunds is cause for optimism among consumers and investors alike, it comes with a cautionary note. The Federal Trade Commission (FTC) has issued fresh warnings about a surge in tax-related scams during the 2026 filing season. According to the FTC, one common scam involves robo-emails or texts with subject lines like “tax refund” that appear to come from the IRS or a state tax office. These messages falsely claim that a refund has been processed or approved, then urge recipients to click a link and provide personal information such as Social Security numbers and bank account details.

“Know that the real IRS and state tax offices won’t reach out by text, email or on social media to get your information,” the FTC emphasized in an online notice. “Only scammers will.” Another prevalent scam features callers impersonating government employees, claiming the taxpayer owes back taxes and attempting to extract personal details under the guise of enrolling them in a supposed IRS program. The FTC urges anyone receiving such calls to hang up immediately.

These schemes are not limited to the busy tax season. The IRS has compiled a list of common scams that taxpayers should be vigilant about year-round. To combat these threats, the FTC recommends reporting abusive tax schemes using IRS Form 14242 and forwarding scam texts to 7726 (SPAM), which alerts telecommunications providers about potential fraud. Taxpayers can also use the “report junk” option on their phones to flag suspicious messages.

For those eager to track the status of their refund, the IRS’s “Where’s My Refund?” tool is the go-to resource. As outlined by both Meyka AI PTY LTD and the FTC, the app typically updates about 24 hours after an electronic filing is submitted. Those who file paper returns will need to wait about four weeks for their status to appear, as manual processing takes significantly longer. To use the tool, filers must provide their Social Security or ITIN, filing status (such as “married filing jointly”), and the exact refund amount listed on their return.

The “Where’s My Refund?” app displays one of several statuses: “Return Received,” indicating the IRS has received and is processing the return; “Refund Approved,” meaning the refund has been approved and is being prepared for issuance; and “Refund Sent,” confirming the money is on its way to the taxpayer’s bank account or mailbox. The tool updates once per day, and the IRS cautions users to avoid unofficial websites and never share sensitive information via email or text.

Filing earlier in the season, choosing e-file and direct deposit, and double-checking returns for errors are among the best strategies for speeding up the refund process. According to Meyka AI PTY LTD, most clean returns are funded within about 21 days, but complex claims or those requiring manual review can take longer. Delays can also occur due to return errors, identity verification checks, or offsets for past-due debts. These factors may limit the refund-driven boost to consumer spending and, by extension, the broader stock market.

Despite these potential hiccups, the consensus among analysts is that larger and faster refunds are poised to deliver a real catalyst for first-quarter economic activity. The S&P 500’s consumer segments represent a meaningful portion of index earnings, and a robust late-Q1 spending surge could ease concerns about a sluggish start to the year. Retailers and payment networks, in particular, stand to benefit if households use their refunds to catch up on basics or indulge in discretionary purchases.

Investors are advised to keep a close eye on key S&P 500 technical levels, such as the 50-day and 200-day moving averages, and to monitor leadership breadth and trading volume for confirmation that refund dollars are indeed flowing into tills. A confirmed breakout with solid breadth would signal that the anticipated cash infusion is materializing as expected.

For filers, staying informed about new tax provisions and eligibility rules is crucial to avoid delays or mistakes that could slow down refunds. The IRS and FTC both stress the importance of using official channels for tracking refunds and reporting suspicious activity. As always, keeping records handy and safeguarding personal information remain the best defenses against both filing errors and fraud.

With expanded tax breaks and a streamlined refund process, this tax season is shaping up to deliver both financial relief for households and a potential spark for the broader economy. But as the rush for refunds begins, vigilance against scams and careful attention to filing details are more important than ever.