Expect a bigger tax refund this year

Summary

Marketplace Morning Report – “Expect a Bigger Tax Refund This Year”

Date: March 17, 2026
Host: Sabri Ben-Achour (in for David Brancaccio)
Duration: ~8 minutes

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Episode Overview

This episode centers on anticipated larger tax refunds for many Americans during the 2026 tax season, why that’s happening, and what it means for households and the broader economy. Additional coverage includes the Federal Reserve’s latest interest rate meeting and a look at discount retailers’ performance amid shifting consumer habits.

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Key Discussion Points & Insights

1. The Federal Reserve’s Interest Rate Dilemma

[01:28 - 02:16]

• Dual Mandate Dilemma:
  The Fed is trying to balance curbing inflation and supporting employment.
  • “Even before the war, inflation was stuck above the Fed’s 2% target while hiring is weak. With the economy losing 92,000 jobs in February, the Fed is swimming in a crosscurrent.” — Nancy Marshall Genser, [01:34]
• War in the Middle East:
  Ongoing conflict complicates decisions—rising energy prices could stoke inflation.
• Likely Outcome:
  The Fed is expected to keep rates steady given the uncertainty.
  • “It is entirely plausible that the Fed won’t deliver any rate cuts this year.” — Gregory Daco (EY economist), quoted by Nancy Marshall Genser, [02:11]

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2. Discount Retailers: Boom and Uncertainty Ahead

[02:16 - 04:21]

• Recent Results:
  • Dollar Tree saw 5.3% sales growth in 2025 but predicts only 3-4% in 2026.
  • Ross Stores shares a similar outlook: strong 2025, weaker forecast for 2026.
• Consumers and Discount Shopping:
  • Shopping at discount stores is now mainstream, not just for low-income families.
    • “There was a removal of stigma. Frankly, that went away as inflation really peaked coming out of COVID.” — Katie Thomas (Carney), quoted by Marketplace Reporter, [03:24]
  • For essential items, low-income shoppers are weighing if they truly need things, sometimes skipping even small luxuries.
    • “Now we’re seeing people just decide if they really need the thing at all.” — Elaine Mogg, [03:51]
  • Summary: Inflation and economic uncertainty are shifting buyer behavior, prioritizing essentials.

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3. Why Tax Refunds Are Bigger This Year

[05:08 - 07:54]

• Key Changes in Tax Law:

  • A 2025 budget bill included several taxpayer-friendly updates, especially benefiting middle and upper-middle income Americans.
  • “On average, if you look at the IRS data, refunds are up over 10%.” — Mark Steber (Jackson Hewitt Tax Services), [05:42]
  • Notable changes:
    • Overtime and Tips: Many who earn overtime or tips get new, significant deductions (up to $25,000 for tips).
      • “If you earn tips … you now get a deduction up to $25,000. That’s a pretty big deduction. That tiered floor did not exist.” — Mark Steber, [05:58]
    • Higher standard deductions for everyone.
    • Bonus deduction for seniors over 65.
    • Car loan interest deduction for US-assembled vehicles.
    • $200 extra per child from the child tax credit.
  • “So just like we would expect when there’s a very large tax cut, we are seeing on average, people receiving higher refunds and they’re more likely to receive a refund.” — Elaine Mogg (Urban-Brookings Tax Policy Center), [06:38]

• How People Spend Their Refunds:

  • Refunds are a crucial cash infusion—especially for low- and middle-income families.
    • “We see people sometimes wait for big expenses to come until tax time so more children will go to the doctor right after receiving a tax refund. We see purchases in places like grocery stores increase.” — Elaine Mogg, [06:58]
  • For some, refunds enable big-ticket items: fridges, cars, etc.
    • “And I think we’ll just see a little bit more of that this year, mostly because people are feeling pressed with the higher prices.” — Elaine Mogg, [07:19]

• Macro Perspective:

  • Each year, Americans receive about $300 billion in refunds—2026 could see this number rise by $100 billion.
    • “Some of the early estimates say that’s going to go up $100 billion.” — Mark Steber, [07:32]
  • Consumer spending of these refunds is expected to positively impact the broader economy.
    • “If consumers turn around, as they often do, and go spend a big chunk of that this spring…that’ll be a good thing for the economy.” — Mark Steber, [07:43]

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Notable Quotes & Memorable Moments

• “Even before the war, inflation was stuck above the Fed’s 2% target while hiring is weak.” — Nancy Marshall Genser, [01:34]
• “There was a removal of stigma [around dollar stores]. Frankly, that went away as inflation really peaked coming out of COVID.” — Katie Thomas, [03:24]
• “If you earn tips … you now get a deduction up to $25,000.” — Mark Steber, [05:58]
• “We see people sometimes wait for big expenses to come until tax time…more children will go to the doctor right after receiving a tax refund.” — Elaine Mogg, [06:58]
• “Some of the early estimates say [refunds] are going to go up $100 billion.” — Mark Steber, [07:32]

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Important Timestamps

• [01:28] – Federal Reserve’s dual mandate dilemma and interest rate outlook
• [02:16] – Discount retailers’ earnings news, consumer shopping shifts
• [05:08] – Deadline reminder for filing taxes and news about larger refunds
• [05:31] – Samantha Fields breaks down why refunds are bigger, including new deductions
• [06:38] – Elaine Mogg on economic impacts of larger refunds and spending behavior
• [07:32] – Macro perspective from Mark Steber: the scale of refunds this year

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Episode Tone & Language

The episode maintains a clear, accessible, and informative tone, blending quick-hit business updates with deeper dives on economic impacts—all with a focus on how news affects everyday Americans.

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Summary prepared to provide a comprehensive synopsis, highlighting economic news updates and giving context to major policy changes and consumer trends discussed in the episode.

Transcript

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[Sabri Ben-Achour]

How can I help?

[Marketplace Reporter]

The IRS said I filed my return,

[Sabri Ben-Achour]

but I haven't One in four tax paying Americans has paid the price of identity fraud.

[Marketplace Reporter]

What do I do?

[Nancy Marshall Genser]

My refund though. I'm freaking out.

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[Nancy Marshall Genser]

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[Mark Steber]

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[Sabri Ben-Achour]

One in four was a fraud Paying American not anymore. Save up to 40% your first year. Visit lifelock.com/special offer terms apply. Which way to steer this economy is being decided now. From Marketplace, I'm Sabri Ben, ashore in for David Brancaccio. The Federal Reserve starts a two day meeting on interest rates today. It can cut them to help the labor market, can raise them to fight inflation, or just keep them where they are and wait and see. The war in the Middle east is making that decision a whole lot more complicated. Marketplace's Nancy Marshall Genser reports.

[Nancy Marshall Genser]

The Federal Reserve has two keep inflation in check and get as many people working as possible. It's been tough to balance this dual mandate because even before the war, inflation was stuck above the Fed's 2% target while hiring is weak. With the economy losing 92,000 jobs in February, the Fed is swimming in a crosscurrent. If it cuts interest rates to support the labor market, it risks nudging inflation even higher. And if the war drags on, rising energy prices will ripple through the economy. So Fed officials are expected to leave interest rates unchanged at this meeting because of the uncertainty of war. In a research note, ey chief economist Gregory Dacko says, quote, it is entirely plausible that the Fed won't deliver any rate cuts this year. I'm Nancy Marshall Genser for Marketplace.

[Sabri Ben-Achour]

Dollar Tree discount stores reported earnings yesterday and they included a recap of 2025. They did pretty well. Sales rose 5.3% over the year. 2026, though, is not looking as good. The company predicted sales growth would slow down to just 3 or 4%. Similar story for Ross Stores, which reported earlier this month strong 2025 looking weaker in 2026. Marketplace's Stephanie Hughes looks at what's working in favor of discounters right now and what is not.

[Marketplace Reporter]

On one busy block in East Baltimore, there's pretty much every kind of discount store imaginable. A bunch of pawn shops, a store advertising cut rate liquor, and a dollar tree where Damien Edmonds popped in to get a bottle of juice.

[Samantha Fields]

You go to a regular market, you're gonna spend three, four dollars and here you only spending a dollar and a quarter.

[Marketplace Reporter]

Edmonds is retired and on a fixed income. He also likes nice shoes and he'd rather put his money towards Jordans than juice. So he takes the bus to the dollar store to get deals.

[Elaine Mogg]

Let me get out, get some of

[Samantha Fields]

this fresh air, stretch my legs. That's the way to do it. You got to learn how to save and work the city accordingly.

[Marketplace Reporter]

In the last couple years, shopping at dollar stores has become cool for people of all income levels. Katie Thomas studies consumer behavior at the consulting firm Carney. There was a removal of stigma. Frankly, that went away as inflation really peaked coming out of COVID But Thomas says low income consumers remain the core customers for dollar stores and when an essential item like gas goes up in price, have less to spend on everything else. In the past, they might have substituted in a cheaper version of something they need.

[Elaine Mogg]

Now we're seeing people just decide if

[Marketplace Reporter]

they really need the thing at all. So prioritizing essentials but maybe skipping a treat, even if it only costs a dollar. In Baltimore, I'm Stephanie Hughes for Marketplace.

[Samantha Fields]

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[Sabri Ben-Achour]

of the millions of people who have not yet done your taxes, you have got one and one day left to file. Believe me, I know all about procrastination, but there may be something to look forward to A lot of people who've already filed have gotten bigger refunds this year, especially middle or upper middle income people. Marketplace's Samantha Fields has more.

[Samantha Fields]

About two thirds of people get a refund when they file their taxes. And so far this year it's been

[Mark Steber]

a really good season, really good for taxpayers. On average, if you look at the IRS data, refunds are up over 10%.

[Samantha Fields]

Mark Steber Jackson Hewitt Tax Services says for lots of people, refunds are up much more than that because of changes Congress made to tax law when it passed that big budget bill last summer. Many people who earn overtime will no longer have to pay taxes on all of it. Same with tips.

[Mark Steber]

If you earn tips as part of your income, think that barista when you're buying your coffee, hospitality worker, that you put a couple dollars in the bed when you're staying overnight in a hotel, a bartender, for example, you now get a deduction up to $25,000. And that' pretty big deduction. That tiered four did not exist.

[Samantha Fields]

And the bigger the deduction, the bigger the refund. This year the standard deduction is higher for everyone, and there's a new bonus deduction for many seniors over 65. People who took out a loan to buy a car can also now deduct the interest as long as that car was assembled in the US and most parents will get an extra $200 per kid from the child tax credit.

[Elaine Mogg]

So just like we would expect when there's a very large tax cut, we are seeing on average, people receiving higher refunds and they're more likely to receive a refund.

[Samantha Fields]

Elaine Mogg at the Urban Brookings Tax Policy center says when people get a refund, they often spend it, especially if they're low or middle income.

[Elaine Mogg]

We see people sometimes wait for big expenses to come until tax time so more children will go to the doctor right after receiving a tax refund. We see purchases in places like grocery stores in increase.

[Samantha Fields]

It's also common for people to put their refund towards something bigger, she says, like a new fridge or a car.

[Elaine Mogg]

And I think we'll just see a little bit more of that this year, mostly because people are feeling pressed with the higher prices.

[Samantha Fields]

They're seeing all of those purchases add up, says Steber at Jackson hewitt.

[Mark Steber]

Each year, 100 million Americans get $300 billion with a B in tax refunds. Some of the early estimates say that's going to go up $100 billion.

[Samantha Fields]

And if consumers turn around, as they often do, and go spend a big chunk of that this spring he says. That'll be a good thing for the economy. I'm Samantha Fields for Marketplace, and in

[Sabri Ben-Achour]

New York, I'm Sabri Benishore with the Marketplace Morning Report. From APM American Public Media. When we get big news overnight and the economy turns on a dime, Marketplace Morning Report is there to get you up to speed as you start your day. And listener support keeps this fast, smart, global reporting available to everyone not stuck behind a paywall. We cannot do it without you. So if you rely on Marketplace Morning Report to make sense of the day ahead, invest in our independent and accessible journalism. Donate [e-mail] or click the link in the show notes.