Filing season has begun, and it promises to be a humdinger.
The OBBBA’s July 2025 tax cut should send refunds soaring, as taxpayers reconcile their final liability against withholdings that largely reflect pre-change law. Savvy planners may have even lower final tax bills—and even bigger refunds—if they leveraged the OBBBA’s transition timelines to their advantage. Big refunds aren’t necessarily good news, but the result is well-aligned with congressional midterms—a lesson learned after 2017’s TCJA.
But filing-season politics turn not just on refund size, but on whether those refunds actually reach taxpayers’ bank accounts. What could temper this spring’s refund-driven wave of good feelings, and how has the Trump Administration responded? More below the fold.
Several factors could prove thorny for taxpayers this filing season. The OBBBA suffers from a guidance gap that’s unlikely to close before returns are due. Many of the OBBBA’s new individual provisions are idiosyncratic and unfamiliar, which may leave some filers disappointed. Buyouts, retirements, and last fall’s prolonged government shutdown left the IRS vulnerable to filing season’s increased customer-service demands.
And, of course, the Department of Education planned to resume involuntary collections on federal student loans in default, starting in early January 2026. Under the Treasury Offset Program, the government can intercept a taxpayer’s federal refund to satisfy delinquent obligations—including defaulted federal student loans. In fiscal 2024, this program yielded more than $3.8 billion for all state and federal debts. The Covid-19 pandemic, however, motivated an extended pause on involuntary collections for student loans in default.
Then, in mid-January, the Trump Administration reversed course, ostensibly to give regulators more time to implement broader changes to the student loan system—including those introduced by the OBBBA. While it probably makes sense to pause things until larger reforms are in place, budget hawks pounced on the administration’s reversal as “beyond ridiculous” and “an incoherent political giveaway.” But the bottom line stands: This filing season’s tax refund bonanza will not be impaired by offsets due to defaulted student loans.
The administration’s policy reversal matters more in the context of concerns about a pending “default cliff” among student-loan borrowers. As of August 2025, approximately 5.3 million of these borrowers were in default, with more than 4 million additional borrowers in “late-stage delinquency.” The economic stakes of pausing involuntary collections are steep, especially as everyday folks see financial clouds on their horizons.
Setting politics aside, the administration’s policy reversal clearly reduces filing-season uncertainty. For many taxpayers, tax refunds function as a predictable—if not precisely forecastable—windfall that can finance major purchases, pay down debt, or establish reserves. Although the magnitude of this lump sum frequently isn’t apparent until returns are filed, most taxpayers expect something more than zero. The renewed pause for involuntary collections prevents these types of unwelcome surprises when refunds are claimed.
Moreover, the administration’s policy reversal represents a rare concession to higher education. With the OBBBA’s student loan cap arriving this summer, prospective borrowers are wary. A spring filled with highly salient stories about involuntary collections probably isn’t ideal in this context. Heading into the fall, the renewed pause on student loan collections may improve the politics and optics around enrollment in higher education and law schools, as well as Republicans’ midterm prospects.
