Here's who walked away with $32 billion in refunds from Trump's tax cuts this tax season

Andrew Keshner

Many homeowners in Democratic-leaning states got hefty tax refunds.

Millions of people are seeing larger refunds with their 2025 taxes. Bigger breaks for state and local property taxes are part of the story - for those who can claim the deduction.

For taxpayers this year, SALT has been sweet.

People who have been able to take advantage of a much higher federal deduction for state and local taxes paid - one of many tax breaks in a massive new tax law - have been making out nicely in the first tax season under the GOP's One Big Beautiful Bill Act.

Internal Revenue Service statistics show income-tax refunds are 11% larger than a year ago as a result of a slew of new tax breaks that were part of the 2025 legislation, including deductions for tips and overtime and for senior citizens.

Over 53 million taxpayers claimed at least one of the new deductions, the Treasury Department said Wednesday, as filing season came to an end. That includes more than 25 million households that deducted an average $3,100 on overtime pay and more than 30 million households that took the senior bonus, averaging a deduction of over $7,500. That's a wide reach. The IRS has received almost 100 million returns so far.

Overall, the extra cash going to households claiming one of the new deductions averaged over $800, according to the Treasury Department.

"This is real relief going to working Americans and their families," IRS CEO Frank Bisignano said at a Senate Finance Committee hearing Wednesday. The tax agency has already sent out more refunds than last year and paid out more in the aggregate, he said.

As tax season got underway, some prognosticators estimated that refunds would be as much as $1,000 bigger this year.

There's reason to believe income-tax refunds are in particular up for people who have been able to claim the larger SALT deduction, which increased to $40,000 from $10,000 under the new legislation. (It had been effectively unlimited until the Republican tax-code overhaul in the first year of Donald Trump's first White House term.)

Nationally, tax refunds are averaging $3,480 for members of Navy Federal Credit Union, 12% higher than a year ago. The credit union's averages are very close to IRS refund averages.

As of early April, refunds averaged $3,462, up from $3,116 a year ago, IRS statistics show.

Some of the states whose taxpayers saw the largest refund increases this year also happen to be places with higher state income-tax rates and bigger property-tax bills.

Navy Federal members in California saw a 22% increase in refund amounts. Their refunds increased by $685, the biggest jump in the country. The average refund for members was $3,815 this year.

Places like Marin County and San Mateo County had some of the highest property-tax bills in the country last year, according to the data-analytics firm ATTOM.

Meanwhile, the credit union's New Jersey members had a 16% increase in their refunds, up $520, for an average refund of $3,800. Property-tax bills in the Garden State last year were the highest in the nation, averaging $10,499, according to ATTOM data.

Tax refunds for Navy Federal members in Ohio were 23% higher, increasing by $620 to an average of $3,290. It turns that out Ohio had one of the highest effective property-tax rates in the country, ATTOM data showed. The Buckeye State has been pulling its income-tax rates lower and switched to a flat 2.75% rate this year.

"The increase in tax refunds this year varies widely by state, reflecting benefits from the One Big Beautiful Bill Act to those members with higher state tax burdens," said Parker West, vice president of analytics in Navy Federal Credit Union's membership and deposit products division.

Middle- and upper-middle-income households stood to gain "most significantly" from the new array of tax cuts - especially from the higher SALT deduction, Wells Fargo economists wrote in a late March note.

The 2025 legislation would cut Americans' taxes by an estimated $129 billion this year, analysts at the Tax Foundation said in January. Within that amount, the higher SALT deduction accounted for over $32 billion. It was the second largest tax cut behind the overtime deduction, which stood to shave $38.7 billion off Americans' total tax bill.

Here may be the rub for GOP lawmakers: Many of the taxpayers claiming the SALT deduction are well off and clustered in Democratic-leaning states. When Republican lawmakers hashed out the new tax law last summer, their party's "SALT caucus" was able to get the higher deduction into the bill, despite objections that the break was a big win for a narrow band of households.

Also read: Homeowners: The SALT deduction is going up to $40,000. Here's how to get the most out of it.

The higher SALT cap is on the books until 2029. Deductions for seniors, tips, overtime and car-loan interest on American-assembled cars are in effect until 2028.

The tip deduction is worth up to $25,000 yearly and is available to households earning under $150,000 for individuals or $300,000 for married couples. The overtime deduction maxes out at $12,500 for individuals and $30,000 for married couples. Meanwhile, the SALT deduction is available to individuals and married couples earning under $500,000.

To claim the SALT deduction, taxpayers have to itemize instead of taking the widely used standard deduction. Itemizing unlocks access to other tax breaks, like the mortgage-interest deduction and the deduction for charitable contributions. The itemized deduction for donations is becoming slightly more stingy for the 2026 tax year.

The SALT tax break's maximum deduction will increase slightly each year through 2029.

The higher SALT deduction doesn't rank as high in popularity as other benefits in the new law, according to a Bipartisan Policy Center survey released this month.

The new senior bonus and the higher standard deduction were the two most popular breaks in the new law, according to the polling. The higher SALT deduction came in last.

Survey participants making over $150,000 were most likely to say they got a significantly larger refund this year, the survey showed.

The higher SALT cap is definitely helping higher-income taxpayers, according to Andrew Lautz, director of tax policy at the think tank. That's likely part of what's behind a "meaningful share" of high-income households saying they've been getting noticeably larger refunds, he told MarketWatch.

"Maybe some in that cohort are also claiming the tips or overtime deductions, but SALT is part of the story," Lautz said.

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-Andrew Keshner

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04-16-26 1112ET