Tax Day 2026 brings larger U.S. tax refunds

As Tax Day approaches on April 15, many Americans are seeing larger tax refunds thanks to the Working Families Tax Cut. That’s good news for the retail industry, because bigger refunds often translate into stronger consumer demand and more activity in local stores. 

This year’s larger refunds are being driven by several key provisions such as a more generous child tax credit, a higher standard deduction, a higher state and local tax cap and new deductions for tips and overtime. Because these changes apply retroactively, many households are receiving a full year of benefits all at once — providing a meaningful boost to disposable income as spring shopping gets underway. 

We spoke with three small retail business owners from across the country who described how these important tax cuts are already benefiting their businesses and driving consumer activity. 

Increased certainty and optimism 

Danny Reynolds, owner of women’s and special occasion boutique Stephenson’s of Elkhart in Indiana, is optimistic thanks to permanency in key tax provisions. “The 199A deduction — which allows businesses to deduct up to 20% of their qualified business income from federal income taxes — being made permanent has been incredibly important for our business,” Reynolds says. “It gives us more certainty and helps us plan for the future.” 

He says Stephenson’s customers are more optimistic as prom season is kicking off, a key selling season for the special occasion business. “We’re seeing more customers choose higher ticket dresses instead of lower-priced options,” Reynolds says. “That usually tells us people have a little more money in their pockets. And, with it being tax season, we believe many of our customers are seeing larger returns and deciding to spend a bit more on important moments like prom.” 

New store investments, consumer confidence 

In Wake Forest, N.C., Joe Kimray says the Working Families Tax Cut is making a real difference by providing more clarity and allowing him to plan for the future. “The 199A deduction made permanent gives us more certainty and allows us to plan ahead with confidence,” says the owner of B&W Hardware, a family-owned hardware and grilling store. 

Kimray is also benefitting from the return of 100% bonus depreciation, which has helped him invest back in the store. The provision allows businesses to immediately deduct the full cost of eligible new or used property like furniture or computers in the first year it is placed in service, and was reinstated in the Working Families Tax Cut. “We’ve already purchased new shelving units to improve our space and better serve our customers,” he says. 

He’s also noticing his customers spending more. “Business is up 18 percent compared to last year, which tells me people have a little more breathing room,” he says, “and they’re spending it right here in our community.” 

Kimray is most excited about the investments he’s making in his team. “We recently raised wages including a $2.50-per-hour increase for one of our high school team members because when our business does well, we want our people to do well too.” 

Tipped employees seeing benefits 

Darcy Michalek, owner of Omaha-based Michalek Enterprises, which includes Subway franchises and Garbo’s Salon and Spa, says the no tax on tips provision is most beneficial to her and her employees. 

Ninety percent of Michalek’s employees are tipped employees, and they are now able to deduct up to $25,000 of qualified, reported income from federal taxes. “It’s great to see the money going back into the pockets of our employees. It has been a real jumpstart for the morale of our businesses and is a real bright spot for us.” 

Take a moment to thank members of Congress who supported the Working Families Tax Cut today through our grassroots campaign.