Most Americans celebrate a big tax refund as a win. Treasury Secretary Scott Bessent wants them to rethink that instinct entirely.
His message, delivered at a White House press briefing on April 15, is simple but pointed: if you are getting a large refund, you have been giving the government an interest-free loan all year. And there is a way to stop.
What Bessent said at the White House
“If you change your withholding, then you will get an automatic real wage increase…on a weekly or a monthly basis,” Bessent said, according to C-SPAN. “You will be able to keep more of your money this calendar year.”
The message is directed at workers whose employers withhold more federal income tax than they actually owe. Those workers end up with a refund at tax time.
MoreEconomy:
- Ernst & Young drops stunning take on economy as oil jumps
- Treasure secretary delivers surprise take on the economy
- Powell sends message on U.S. economy and AI-related job loss fear
Bessent’s point is that the money was theirs all along. They simply let the IRS hold it without earning any return on it.
By adjusting withholding, workers can take that money home throughout the year instead of waiting until the following spring to get it back.
Why refunds are running so high right now
The timing of Bessent’s message is connected to a specific policy detail most Americans are unaware of.
The One Big Beautiful Bill Act, enacted in July 2025, introduced new tax deductions for the 2025 tax year, including deductions for tip income, overtime earnings, and auto loan interest, according to Moneywise.
Because the law passed partway through 2025, the IRS did not update its employer withholding tables in time. As a result, many workers had too much withheld for the full year and received larger-than-usual refunds when they filed their 2025 returns.
The numbers confirm this. The average tax refund as of April 17, 2026 is $3,275, up more than 11% from last year’s average of $3,116, according to IRS filing season statistics. Bessent’s argument is that those workers did not get a windfall. They simply got their own money back, late.
The real cost of overwithholding in 2026
In most years, the cost of overwithholding is mainly an opportunity cost. Workers miss out on the interest or investment returns they could have earned on that money throughout the year.
In 2026, that cost is more concrete. Consumer prices rose 3.3% year-over-year as of March 2026, according to CNBC. Gas prices have surged by $1.20 per gallon since the start of the Iran war, according to CBS News.
A household waiting until spring 2027 to receive an overpayment refund will receive dollars that have already lost purchasing power. The money buys less than it would have if taken home in each paycheck throughout the year.
The catch Bessent did not fully spell out
Reducing withholding requires precision. Get it wrong, and the consequences can be significant.
If your total withholding does not cover at least 90% of the tax shown on your annual return, the IRS can assess an underpayment penalty, according to the IRS. The agency also charges interest on those penalties.
A worker who slashes withholding too aggressively may find themselves with a surprise tax bill and additional charges the following April.
“Haphazard changes” are a real risk, financial planner John Nowak told CNBC. Nowak advises using structured tools and a careful review of your full tax picture before making any adjustments.
Neretin/Getty Images
How to adjust withholding correctly
The IRS provides a free tool for this. The IRS Tax Withholding Estimator calculates how much an employer should withhold each pay period based on income, deductions, credits, and filing status. Have a recent pay stub and last year’s tax return on hand before using it.
To apply the change, submit a new Form W-4 to your employer. Changes typically take effect within one or two pay periods. Life events that should trigger a review include marriage or divorce, a new job, a second income, bonuses, freelance work, a new child, or major changes in deductions, according to Experian.
Key figures on withholding and the 2025-2026 tax season:
- Average tax refund as of April 17, 2026: $3,275, up 11% from $3,116 last year, according to the IRS
- IRS underpayment penalty threshold: withholding must cover at least 90% of tax owed to avoid penalty and interest, the IRS confirmed
- New deductions introduced by the One Big Beautiful Bill Act: tip income, overtime earnings, and auto loan interest, according to Moneywise
- Safe harbor rule: paying 100% of last year’s tax liability through withholding also protects workers from underpayment penalties, the IRS noted
The political message behind the financial advice
Bessent’s comments also carry a broader message from the Trump administration. It wants workers to feel the effect of the One Big Beautiful Bill Act in their paychecks, not just as a once-a-year spring refund. If workers adjust their W-4s, more take-home pay flows on a weekly or monthly basis. That is a visible effect the administration can point to as evidence its tax agenda is working.
For households living paycheck to paycheck, the practical stakes are higher than the political ones. Waiting until April for a refund is not just inefficient. It is a budgeting problem that plays out across every month of the year.
What workers should do now
The starting point is the IRS Tax Withholding Estimator, which is free and requires no account or registration. Workers should have a recent pay stub and last year’s tax return on hand before using it.
If the estimator confirms withholding is too high, file a new Form W-4 with your employer. Changes typically take effect within one or two pay periods. The goal is not a zero refund. It is the right balance: enough withheld to avoid penalties, but not so much that the IRS holds money that could be covering bills or earning interest in a savings account.
Bessent has framed that balance as a wage increase. Technically, it is not. The total tax owed stays the same. But in an environment where inflation is running at 3.3% and household budgets are stretched, the timing of when you keep your money matters more than most people realize.
Related: JPMorgan did the math on the gas price shock and tax refunds
