Why was my 2026 tax refund so low?

Big tax law changes rolled through in 2025 that impacted many taxpayers in either positive or negative ways. If your tax refund was lower than expected, it was probably because of a new tax law change or it may have been due to a misunderstanding of tax law application. 

If you have an ITIN but your children are US citizens, your tax refund was likely much smaller than last year because you did not get the same credit for them that you received last year. This was the result of a change in tax law. This large tax law change was the prevention of ITIN holders to claim the Child Tax Credit (and additional child tax credit, among other lucrative tax credits and deductions) for their SSN holding dependents. This was the single largest reason for the ultra low tax refunds received by ITIN holders. This tax law change will single-handedly disincentivize ITIN holders from filing taxes moving forward. 

If you are a senior citizen, you may have expected an additional refund of $6,000 per taxpayer over 65. Unfortunately, that has been a common misunderstanding of how the new Senior Tax Deduction works. While subject to AGI limitations, the new senior tax deduction reduces taxable income by $6,000 per taxpayer over 65 (holding a valid SSN). It in no way provides an additional refund unless it is simply as a result of lower taxable income. If a senior citizen is only receiving social security, that income is very likely not going to be subjected to income tax as it is. That is not to say that the new senior tax deduction did not help any seniors; it absolutely helped many seniors lower their taxable income. It was just not as beneficial as the rumored misinformation made it out to be. 

Another reason your tax refund may have been lower than expected was if you had overtime compensation and expected all of it to be tax free. Only the extra portion of overtime was granted a tax deduction, the “half” of “time and a half”. For some workers, this was a very valuable deduction, but of course, the deduction was limited to the extent of earnings that were overtime earnings and pared down from that. 

Tax law changes year to year. If you feel strongly enough, it is always advisable to advocate for yourself by calling your Senators or House Representatives to let them know how their tax legislation is impacting you personally as a constituent of theirs.