Cut in IRS withholding shrinks tax refunds next year, but adjustments will be smaller, experts say

A 50% cut in IRS withholding tax will apply in November to reflect the interim tax reduction passed by parliament, before returning to current rates in December. While this increases take-home pay in November—including the Christmas allowance—tax experts note it will lead to smaller refunds or potential tax bills when filing in 2027, though the gap will be less severe than in previous years. EY simulations indicate that a single worker earning 1,500 euros a month with standard deductions could face a small payment of around 20.90 euros, whereas higher earners or families will still see refunds, such as 102 euros for a single worker earning 2,500 euros or roughly 806.80 euros for a couple with two children earning 4,000 euros each.