If you’re a California resident managing your family’s finances, you may be wondering: “Will I get a bigger tax refund this year?” According to the U.S. Treasury, the answer is likely yes. Tax filers could see refunds averaging $1,000 higher than last year—but that windfall comes with important financial planning considerations, especially for families focused on long-term wealth protection and estate planning.
Who Is This Article For?
This guide is for California residents and families who:
Why Are Tax Refunds Increasing in 2026?
The Treasury projects an average refund increase of $1,000 per household, driven by two primary factors:
1. New and Expanded Tax Breaks for 2025
Congress implemented several significant tax changes that took effect for the 2025 tax year. Most taxpayers didn’t adjust their withholding to account for these changes, meaning the benefits show up as larger refunds rather than increased take-home pay throughout the year.
2. Unchanged Tax Withholding
According to Tom O’Saben, director of tax content for the National Association of Tax Professionals, “For clients whose income, filing status, and dependents haven’t changed much since 2024, the combination of expanded tax benefits for 2025 and unchanged withholding is clearly pushing refunds higher”.
The Three Tax Changes Making the Biggest Difference
Larger Standard Deduction
The standard deduction—used by the vast majority of filers—increased significantly:
This change affects millions of filers across all income levels and directly reduces taxable income.
Expanded SALT Deduction
For California residents in high-tax areas, this is particularly significant. You can now deduct up to $40,000 in state and local taxes (SALT)—up from $10,000 last year. This includes:
The increase means more California families may benefit from itemizing deductions rather than taking the standard deduction. This change can produce a noticeable refund increase, especially when withholding wasn’t adjusted.
New Senior Deduction
If you’re 65 or older and meet income restrictions, you can now claim a special $6,000 deduction ($12,000 for joint filers) on top of either your standard deduction or itemized deductions. The AARP estimates more than 30 million seniors will benefit from this provision.
How Should California Families Think About Their Tax Refund?
A larger refund can be viewed two ways:
As an Interest-Free Loan to the Government
You essentially overpaid taxes throughout the year and are now getting your own money back—without any interest.
As Forced Savings
If you’re not a consistent saver, receiving a lump sum may help you set aside money you might not have saved otherwise.
Should You Adjust Your Withholding?
If you want to improve your monthly cash flow and put your money to work throughout the year—whether in high-yield savings accounts or paying down debt—you might consider adjusting your tax withholding.
The IRS has already adjusted income tax withholding tables for 2026 to account for current tax breaks. However, if you work with a tax adviser, it’s worth checking whether your current withholding is appropriate.
Important Considerations:
Why This Matters for Estate Planning and Family Protection
For California families focused on long-term financial security and estate planning, a larger refund presents an opportunity to:
Tax law changes don’t just affect your annual refund—they can significantly impact your estate planning strategy. The interplay between income tax planning and estate tax planning requires careful coordination, especially in California where property values and state tax considerations add complexity.
Take Control of Your Financial and Estate Planning Future
If you’re a California resident concerned about protecting your family’s assets and navigating the complexity of tax and estate planning, you don’t have to figure it out alone. California Probate and Trust, PC offers comprehensive estate planning services that integrate with your overall financial strategy.
Our experienced attorneys provide:
Schedule your free consultation today by visiting cpt.law or calling (866) 674-1130.
Source: CNN Business – Why federal tax refunds may be bigger than usual
Legal Disclaimer: This article is for informational purposes only and does not constitute legal, tax, or financial advice. Tax laws are complex and subject to change. Individual circumstances vary significantly, and what works for one family may not be appropriate for another. Before making any decisions regarding tax withholding, estate planning, or financial management, you should consult with qualified legal, tax, and financial professionals who can evaluate your specific situation. California Probate and Trust, PC does not provide tax preparation or tax advisory services. This content should not be relied upon as a substitute for professional advice tailored to your individual needs and circumstances.