On April 17, the Internal Revenue Service (IRS) reported that it had issued approximately $296 billion in tax refunds. This is an increase of about 17% compared to the prior year. For the 2025 tax year, the average refund amount to date was $3,275. This amount is about $300 higher compared to last year.

On April 22, 2026, Treasury Secretary Scott Bessent spoke before the U.S. Senate Committee of Appropriations and discussed the new tax provisions. Secretary Bessent pointed out that there were three substantial tax benefits for individuals that resulted in higher refunds.

The senior citizen deduction of $6,000 ($12,000 for a married couple filing jointly) was claimed by 31 million taxpayers. This deduction is in addition to the standard deduction and is available for years 2025 through 2028. With the additional senior deduction, an estimated 88% of Social Security benefit recipients did not pay tax on that retirement payment.

Working individuals benefited from the overtime compensation deduction. This deduction can reach $12,500 ($25,000 for a married couple filing jointly). Over 28 million taxpayers have claimed this deduction for 2025. This deduction phases out for single persons with incomes over $150,000 or couples with incomes over $300,000.

The third tax benefit was the deduction of up to $25,000 of qualified tip income. Over seven million taxpayers claimed this deduction. This deduction is allowed in addition to the standard deduction. The tip deduction phases out for single persons with incomes over $150,000 or couples with income over $300,000.

The IRS data suggests that approximately the same number of taxpayers filed this year as in prior years. The IRS did note a small increase of 500,000 returns being processed this filing season. The IRS also noted that there was a 1% increase in the number of returns filed electronically.

Updated ERC Claims Option

In IR-2026-58, the Internal Revenue Service (IRS) offered a new option for resolving an Employee Retention Credit (ERC) claim. The IRS noted that some taxpayers had their ERC claims disallowed and were issued Letter 105-C or 106-C. Generally, these taxpayers have two years from the date of the letter to resolve the claim with the IRS or file a refund suit in federal court.

The IRS and the taxpayer could also contest the disallowance through the IRS Independent Office of Appeals. This contest does not change the two-year deadline. After the two-year period, the opportunity to appeal or recover the ERC claim is no longer available.

Because some taxpayers are now approaching the limit of their two-year period, the IRS is offering a potential extension of time to resolve claims. The extension requires filing IRS Form 907, Agreement to Extend the Time to Bring Suit.

This option is available only to a limited number of taxpayers. The IRS stated, "Starting today, taxpayers with six months or less remaining in their time to file suit, and who are waiting for the IRS to consider their disallowance response to Letter 105-C or 106-C, may submit Form 907 requesting an extension via the IRS Document Upload Tool by going to IRS.gov/DUTReply and selecting notice ‘CP320B’ from the drop-down menu."

If this form is filed, the IRS will review it and may agree to an extension. The IRS emphasizes that this potential extension does not apply to other types of IRS disallowances of various provisions and benefits.

National Taxpayer Advocate Erin Collins stated, "The two-year deadline under IRC Section 6532(a) is unforgiving, and too many taxpayers, practitioners, and IRS employees are unaware of its consequences until it is too late."

Editor's Note: This decision by the IRS to allow limited extensions is a result of criticism from tax professionals. They are concerned that IRS staff reductions are delaying responses and taxpayers could lose their right to claim an ERC benefit.

Expanded IRA Access with New Website

On April 30, 2026, the President signed an executive order that requires the Treasury Department to create a new website to encourage greater access to individual retirement accounts (IRAs).

The website, which will be titled “TrumpIRA.gov,” will have multiple functions. The site is intended to help the "often-left-out American workers" have access to retirement opportunities similar to those offered to federal employees. It will also encourage individuals to take advantage of a potential $1,000 match for IRA savings. Because the policy of the federal government is to encourage retirement savings, the new website will highlight the Federal Saver’s Match contribution of $1,000.

Financial institutions that offer eligible IRAs will be identified on the website and workers will be encouraged to contact these institutions to establish an IRA. There are several requirements for an IRA custodian to qualify and be listed on the website. The custodian must offer a menu of investment options, and the investment options should include life-cycle or targeted-retirement-date funds. The funds should also be designed to protect principal. The plan must have no more than 15 basis points of costs and no minimum-contribution or balance requirements.

Nonprofit organizations are also encouraged to provide retirement benefits. There will be new "guidance with respect to the tax treatment of contributions made by tax-exempt organizations to IRAs maintained by workers who are members of a charitable class entitled to receive the contribution without jeopardizing the organizations’ tax-exempt status."

The goal of the plan is to provide access to retirement accounts with low fees. It is particularly designed to apply to workers in small businesses and independent contractors.

National Economic Council Director Kevin Hassett was present when the bill was signed and explained that the bill is designed to assist and encourage middle income Americans to have access to savings accounts. Hassett further stated, "What we have done here is you have given the match to low-income people when it comes below $35,000, but we think that there are a lot of people even who make more than that that do not have many assets for retirement."

House Ways and Means Committee ranking member Richard Neal (D-MA) responded that more is needed while promoting the Automatic IRA Act. This bill would require businesses with ten or more employees to offer retirement savings plans to workers. It would also expand the credit for businesses that establish retirement plans.

Applicable Federal Rate of 5.0% for May: Rev. Rul. 2026-9; 2026-19 IRB 1 (16 April 2026)

The IRS has announced the Applicable Federal Rate (AFR) for May of 2026. The AFR under Sec. 7520 for the month of May is 5.0%. The rates for April of 4.6% or March of 4.8% also may be used. The highest AFR is beneficial for charitable deductions of remainder interests. The lowest AFR is best for lead trusts and life estate reserved agreements. With a gift annuity, if the annuitant desires greater tax-free payments the lowest AFR is preferable. During 2026, pooled income funds in existence less than three tax years must use a 4.0% deemed rate of return. Charitable gift receipts should state, “No goods or services were provided in exchange for this gift and the nonprofit has exclusive legal control over the gift property.”