- 41% of Americans felt completely clueless about how the “One Big Beautiful Bill” impacts their 2025 tax returns.
- 62% of Americans expect this tax season to be “more chaotic”
- 67% of taxpayers weren’t planning for tax year 2025 until 2026
By Lisa Greene-Lewis, CPA and Tax Expert, TurboTax
The new year is here, and so is tax season—leaving many Americans in a fog of financial uncertainty, all wondering one thing: “How will this new tax legislation affect me?”
According to a new study conducted by Wakefield Research on behalf of Intuit TurboTax of 1,000+ U.S. adults ages 18 and older, 62% of Americans believe the upcoming tax season will be more chaotic because of new tax legislation in the “One Big Beautiful Bill” and 67% of taxpayers say they weren’t planning for tax year 2025 until 2026.
The new legislation has done little to settle the nation’s financial nerves. Only 30% of Americans believe the bill will improve their lives, barely edging out the 33% who are bracing for things to get worse. This confusion is so profound that nearly one-fifth of taxpayers (19%) would rather clean a clogged frat-house toilet than try to understand how the new tax rules affect them.
Two out of five Americans admit they have little to no understanding of what is actually in the “One Big Beautiful Bill” as they prepare their current tax returns. This lack of clarity regarding the “One Big Beautiful Bill” carries real consequences, especially at a time when 64% of Americans are living paycheck-to-paycheck and 57% of active Credit Karma members are carrying revolving debt.
Despite the confusion—where one-third of Americans mistakenly believed the bill eliminates taxes on Social Security benefits—the legislation does contain meaningful adjustments that could benefit millions on their 2025 returns, including:
- Expanded Child Tax Credit for parents with children under 17
- An increase in the SALT (state and local taxes) cap deduction to $40,000 for individuals earning up to $500,000
- New deductions for qualified tip income (up to $25,000) and overtime pay (up to $12,500 for individuals, $25,000 for married couples)
- Making the 20% Qualified Business Income deduction permanent
These changes reflect the realities for many Americans: 28% of Millennials plan to buy a home, 35% of Gen Z started a new job this year, 23% earned overtime, and 12% earned tip income.
Under the bill, qualifying workers (from beauticians, estheticians, and rideshare drivers to firefighters, police officers, and retail employees) may now deduct up to $25,000 in tips or up to $12,500 in overtime ($25,000 for married couples). For many, these deductions are the difference between owing money in April and receiving a meaningful refund.
The Power of Planning for Tax Season and Beyond
The challenge for taxpayers is understanding how the new bill intersects with their daily life and which moves they can make now to maximize their 2025 refund and plan ahead for tax year 2026.
“If you didn’t plan for tax year 2025 until 2026, you may have missed some key savings opportunities already,” said Lisa Greene-Lewis, CPA and Tax Expert with TurboTax. “But there are still so many tax deductions and credits you can take to boost your current refund, and filers are expected to see a $1,000 increase in refund or lower balance due. Plus, it’s a great time to start planning for tax year 2026, by making sure you have a social security number for your new baby in order to get the increased Child tax Credit.”
For many, the start of 2026 is a holistic financial checkup. Follow these three steps to set yourself up for a stronger year:
1. Start with a Financial Health Check:
- Pull your credit report and check your credit score. A stronger score means better rates on everything from auto loans to mortgages later this year.
- Tackle high-interest debt. Paying down revolving debt before the end of the first quarter can lower your credit utilization ratio (ideally below 30%, or 10% for optimal scores), potentially boosting your score.
2. Maximize Your 2025 Tax Refund:
- Finalize Retirement Contributions for 2025. You can contribute to your IRA up to the tax deadline, with a limit of $7,000 ($8,000 married filing jointly) for the 2025 tax year. This may still be deductible.
- Maximize Retirement Contributions for 2026. Now is the time to set up or increase contributions for the current tax year. The limits for 2026 will be announced, but these contributions directly reduce your taxable income while building long-term wealth.
- Adjust Withholdings for 2026. Use a free W-4 calculator to tailor your withholdings based on whether you want bigger paychecks now or a smaller tax bill next spring.
3. Plan for Your Refund Before You Receive It:
- With roughly 63% of Americans receiving a refund last season (averaging more than $3,000), and expected increase in refunds, a strategic plan is essential for this year’s expected return.
- Decide how to split your refund. Consider putting a third toward your highest-interest debt, a third into an emergency fund, and a third toward a financial goal like a down payment or investment account.
- Access funds faster. TurboTax and Credit Karma offer options like Refund Advance (up to $4,000 instantly upon IRS acceptance) and Five Days Early access to your federal refund.
Connect Your Tax Strategy to Your Financial Goals
TurboTax and Credit Karma are working together to blend human expertise with AI to deliver done-for-you tax prep, personalized refund optimization, debt-paydown strategies, and credit-building guidance, all in one integrated platform. This means you can see how your 2025 tax refund fits into your broader financial picture and use it to improve your credit score and free up monthly cash flow.
The economic landscape may be unpredictable, but your financial future doesn’t have to be. The steps you take now, at the start of 2026, will shape your current refund and set the stage for a financially stronger year.
The IRS e-file is open now and you can file with TurboTax and Credit Karma today whether you want to do your taxes yourself or have a tax expert do them for you virtually or in person. You may also be able to file your federal and state taxes for free with TurboTax Free Edition all year or with the TurboTax Mobile App offer through February 28, 2026.
Methodology
The TurboTax Survey was conducted by Wakefield Research among 1,000 Nationally Representative U.S. Adults Ages 18+, and an oversample to a total of 1,000 US Hispanic Adults Ages 18+, between September 19th and September 28th, 2025, using an email invitation and an online survey. The data has been weighted. Results of any sample are subject to sampling variation. The magnitude of the variation is measurable and is affected by the number of interviews and the level of the percentages expressing the results. For the interviews conducted in this particular study, the chances are 95 in 100 that a survey result does not vary, plus or minus, by more than 3.1 percentage points from the result that would be obtained if interviews had been conducted with all persons in the universe represented by the sample.