Early Tax Season Insights: Refunds Are Up, Filings Are Down

Tax season tends to reveal patterns about how Americans manage their finances. Early IRS data for the 2026 filing season shows an interesting trend: Refunds are significantly higher than last year, yet fewer taxpayers have filed early.

At first glance, these numbers apply primarily to individual tax returns. However, they are especially relevant for entrepreneurs and freelancers. Many small businesses operate as pass-through entities. That means business income flows directly to the owner’s personal tax return through forms such as Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship), Schedule SE (Form 1040), Self-Employment Tax, or Schedule K-1.

In other words, individual filing trends often reflect the behavior of business owners themselves. Early statistics suggest that while taxpayers are expecting larger refunds this year, many are taking more time to prepare their filings.

For entrepreneurs, that delay often comes down to gathering financial records, reconciling the books, and ensuring deductions are properly documented. Understanding these early tax season insights with the help of this guide ensures small business owners make better decisions before the tax filing deadline.

Key Highlights

• Early IRS data show slightly fewer returns filed so far compared to 2025.

• The average tax refund has increased by more than 10%, reaching $3,742.

• Total refunds issued have risen to $136.6 billion early in the season.

• Direct deposit remains the most common refund method, with over 36 million payments already sent.

• IRS website visits jumped by nearly 50%, indicating taxpayers are actively researching tax information.

• Many entrepreneurs file later in the season because business income and deductions require additional documentation.

• These trends suggest that taxpayers are being more cautious and possibly more strategic about filing this year.

Early Tax Season Snapshot: What the Latest IRS Data Shows

According to the latest IRS filing statistics, several key metrics have shifted compared with the same point last year. While filings are slightly down, refund amounts have increased substantially.

Below is a simplified breakdown of early filing data.

Source: IRS filing season statistics

Several insights and tax filing trends stand out for the 2026 tax season:

• Early filings are slightly lower, down roughly 1.7% compared with last year.

• Refund amounts are much higher, increasing by over 10%.

• Digital engagement is surging, with millions more taxpayers visiting IRS.gov for guidance.

For entrepreneurs and self-employed professionals, these numbers likely reflect a familiar reality. Filing business-related taxes often requires more time and preparation than standard employee returns.

Why Tax Filings Are Slightly Down Early This Season

A decline in early filings does not necessarily indicate fewer returns overall. Instead, it often reflects how small business owners file taxes and prepare their documentation. For many entrepreneurs and freelancers, the process simply takes longer.

More taxpayers may be waiting for complete tax documents

Many tax forms arrive later in the season, especially those tied to business income.

Examples of forms due after tax season kicks off include:

• IRS Form 1099-NEC, Nonemployee Compensation for independent contractor income

• IRS Form 1099-K, Payment Card and Third Party Network Transactions for payments from digital platforms

• Schedule K-1 forms for partnerships or S corporations

Business owners often cannot finalize their returns until these forms arrive. They also need time to reconcile expenses, confirm revenue totals, and review financial records.

The IRS notes that many self-employed individuals report their business income through their personal tax return, which makes the filing process more complex than a typical IRS Form W-2, Wage and Tax Statement return. More information about this process is available through the IRS small business tax trend guidance.

Increased reliance on professional tax preparation

Another factor behind slower early filings is the growing number of entrepreneurs seeking professional help before submitting their returns. As their businesses grow, so do their tax complexities.

Business taxes can involve managing:

• Multiple income sources

• Deductible expenses across several categories

• Estimated tax payments

• Depreciation and asset deductions

Rather than rushing to file early, which can lead to mistakes, many small business owners prefer to work with experienced accountants to ensure their returns are accurate and optimized.

Professional tax preparation and support can help ensure entrepreneurs:

• Identify overlooked deductions

• Reduce audit risk

• Structure income more efficiently

Many entrepreneurs trust 1-800Accountant's affordable business tax services to review their returns and ensure they are filing correctly.

Entrepreneurs and freelancers often file later

Self-employed individuals frequently file closer to the deadline because their financial documentation is more complex.

Common reasons freelancers often file later include:

• Reconciling bookkeeping records

• Tracking business expenses

• Reviewing estimated tax payments

• Gathering documentation from multiple platforms

Many freelancers and business owners must also clean up their financial records before filing. That often requires updating bookkeeping records, categorizing expenses, and confirming income totals.

Accurate financial tracking throughout the year can significantly speed up this process. 1-800Accountant's full-service small business bookkeeping solution helps entrepreneurs stay organized year-round, reducing last-minute stress during tax season.

Why Tax Refunds Are Higher This Year

While filings may be slightly down early in the season, IRS tax refund statistics show refund amounts are trending higher. Several factors could be contributing to this shift.

Withholding adjustments and tax credits

Changes in withholding can significantly affect refund amounts. If taxpayers had more tax withheld throughout the year than they ultimately owed, they may receive larger refunds. Adjustments to tax credits and deductions can also increase refunds for eligible taxpayers.

For example, families may claim credits related to:

• Education (lifetime learning credit)

• Dependents (child tax credit)

• Other qualified expenses

These adjustments can increase refund amounts even if income remains relatively stable.

Business deductions impacting taxable income

Entrepreneurs often have deductible business expenses that reduce their taxable income.

Common deductible business costs include:

• Home office expenses

• Business travel and mileage

• Marketing and advertising costs

• Software subscriptions

• Equipment purchases

When these deductions are tracked accurately, they can significantly reduce a taxpayer’s liability. That reduction in tax liability often translates into larger refunds, especially if estimated taxes or withholding payments were higher than the final tax obligation.

Direct deposit trends

Another important factor in the IRS's refund data is the continued growth of direct deposit.

According to the IRS, more than 36 million refunds have already been issued through direct deposit, making it the most common refund delivery method. The agency notes that IRS direct deposit refunds remain the fastest way for taxpayers to receive their money.

Direct deposit refunds are also processed more efficiently than paper checks. As more taxpayers file electronically and choose direct deposit, refund distribution becomes faster and more streamlined.

What These Tax Trends Mean for Small Business Owners

For entrepreneurs who file taxes as individuals through pass-through structures, these early tax season insights offer several important lessons.

First, the data show that tax preparation for business owners often takes longer than for standard individual returns. However, don't take delays as a sign of procrastination. In many cases, they reflect the complexity of managing business income and deductions.

Second, the increase in refund amounts highlights the value of proper financial organization. Entrepreneurs who track expenses throughout the year often discover deductions that significantly reduce their tax liability.

Several factors influence how efficiently a business owner can file taxes:

• Organized financial records

• Accurate bookkeeping

• Clear documentation of business expenses

• Strategic tax planning

Without these elements in place, filing can quickly become overwhelming and a distraction.

Entrepreneurs who want to simplify tax season often benefit from year-round bookkeeping and tax support. 1-800Accountant's full-service bookkeeping and year-round tax advisory provide ongoing guidance so business owners can make smarter financial decisions before filing deadlines arrive.

This proactive approach for your business often leads to:

• Better outcomes

• Fewer surprises

• More predictable tax obligations

How Small Business Owners Can Prepare for the Rest of Tax Season

Even if you have not filed yet, there is still time to prepare effectively for the remainder of tax season. Taking these proactive steps now can reduce stress and help ensure accuracy.

Organize financial records early

One of the most important steps in tax preparation is organizing your financial documentation.

Entrepreneurs should ensure they have clear records for:

• Business income

• Deductible expenses

• Vendor payments

• Estimated tax payments

• Asset purchases

While not a rule or law, separating business and personal finances is essential as well. Using dedicated business bank accounts and accounting software will simplify tracking throughout the year.

Review deductions before filing

Many small business owners overlook deductions that could significantly reduce their tax liability.

Common overlooked deductions that you should consider include:

• Home office expenses

• Vehicle mileage and travel costs

• Professional services

• Tax software subscriptions

• Business insurance

• Marketing and advertising

• Business supplies

Taking time to review these categories before filing can help ensure no eligible deductions are missed.

Work with an experienced accountant

Entrepreneurs often benefit from year-round professional support when filing their taxes. Working with an experienced accountant familiar with your industry and state can help:

• Identify tax savings opportunities

• Ensure compliance with IRS rules

• Avoid costly filing errors

• Plan for future tax obligations

For many small business owners, this level of expertise and ongoing support provides peace of mind during a complex filing season.

The Bigger Picture: Tax Season Is Only One Part of Smart Financial Planning

While tax filing season receives a great deal of attention each year, it should not be the only time entrepreneurs review their finances. Smart business owners should treat tax planning as a year-round strategy, not just an annual task.

Consistent financial management can help your business:

• Forecast tax liabilities more accurately

• Manage cash flow more effectively

• Plan investments and growth strategies

• Reduce tax burdens over time

When 1-800Accountant's full-service bookkeeping, entrepreneur tax planning, and financial reporting work in concert, entrepreneurs gain a clearer picture of their business performance.

Year-round accounting support from your designated 1-800Accountant team also helps your business stay compliant with changing tax rules and regulations. As tax laws change and evolve, guidance from tax professionals becomes increasingly valuable.

Next Steps

Early IRS data reveal two clear 2026 tax season trends:

• Refunds are higher

• Early filings are slightly lower

For many taxpayers, especially entrepreneurs, this reflects the growing complexity of modern tax preparation. Business income reporting, deductions, and documentation often require additional time and careful review.

Rather than rushing to file, many business owners are taking a more deliberate approach to their returns. Getting organized and planning strategically throughout the year can lead to better accuracy and potentially larger refunds.

If you want to simplify tax season and make smarter financial decisions throughout the year, working with an experienced accountant, tax preparer, or other accounting professional can make a meaningful difference. Professional guidance can help ensure your return is accurate, optimized, and aligned with your long-term business goals.

Schedule a free 30-minute consultation with 1-800Accountant to get an idea of how much your business can save.