Trump Economist Predicts “Biggest Refund Season Ever” in 2026

Trump Economist Predicts “Biggest Refund Season Ever” as 2026 Affordability Agenda Takes Shape

As the 2026 economic outlook begins to crystallize, President Donald Trump is rolling out what his administration calls a sweeping affordability agenda, aimed squarely at lowering costs for American households. From mortgage relief and credit card interest caps to housing market reforms and tax-driven refunds, White House economists say the coming year could deliver one of the strongest economic rebounds in decades.

At the center of these projections is Kevin Hassett, Director of the White House National Economic Council, who recently outlined why the administration believes Americans may be heading toward what he calls the largest tax refund season ever.

Lower Rates, Lower Costs: The Core of the 2026 Agenda

President Trump’s economic push focuses heavily on reducing borrowing costs that have weighed on families since the post-pandemic inflation surge. Key proposals include:

• A one-year 10% cap on credit card interest rates, beginning January 20

• A directive for Fannie Mae and Freddie Mac to purchase $200 billion in mortgage-backed securities

• Executive action restricting large institutional investors from buying single-family homes

According to Hassett, these policies are designed to restore balance to markets that have increasingly priced ordinary Americans out of homeownership and affordable credit.

Targeting Institutional Investors in the Housing Market

One of the most significant changes under consideration is limiting the role of large institutional investors in single-family housing.

Hassett explained that depending on how “large institutional investor” is defined—whether ownership of 100 or 1,000 homes—such entities can account for up to 20% of housing inventory in certain markets. These investors often enjoy tax advantages that individual homebuyers do not, allowing them to outbid families looking for a primary residence.

President Trump, Hassett said, views this imbalance as fundamentally unfair.

“The goal is to make sure everyday Americans are competing on a level playing field,” Hassett noted, adding that upcoming executive guidance will clearly define investor thresholds and housing categories.

A 10% Credit Card Interest Cap: Pressure on Banks

The proposal to cap credit card interest rates at 10% has already sparked intense debate within the financial sector. Analysts warn the move could reduce large banks’ pre-tax earnings by 5% to 18%, while wiping out profits at credit card-focused institutions.

Hassett acknowledged these concerns but suggested legislation may not be necessary.

“We’ve been talking with CEOs of major banks,” he said. “Many believe the president has a good idea and may voluntarily offer new products targeted at consumers who deserve credit but are currently priced out.”

The administration expects market-driven compliance, rather than immediate congressional action.

Mortgage Relief Through Strategic Bond Purchases

Another pillar of the affordability agenda is the planned purchase of $200 billion in mortgage bonds by government-sponsored enterprises, a move intended to lower mortgage rates without direct Federal Reserve intervention.

Hassett said early market reactions suggest the strategy is already having an impact. With mortgage payments having nearly doubled in recent years—and required down payments rising from roughly $15,000 to $32,000—relief is badly needed.

“Fewer people are buying homes now than at almost any point in my lifetime,” Hassett said, blaming inflation and rate hikes for the slowdown.

Using 401(k) Funds for Home Down Payments

Perhaps the most unconventional proposal involves allowing Americans to tap into their 401(k) retirement accounts to fund home down payments.

While critics worry about long-term retirement risks, Hassett described a structure where homeowners would transfer an equivalent portion of home equity into their 401(k), allowing retirement assets to grow alongside housing values.

“This solves the liquidity problem early in life,” he said, “without sacrificing retirement security.”

Economic Growth Outlook: 4% to 6% GDP Possible

Looking ahead, Hassett painted an optimistic picture of economic growth. Productivity is already running near 4%, and with capital investment and labor gains added in, he sees little chance of GDP growth falling below that level.

He pointed to recent data showing fourth-quarter GDP near 5%, despite a government shutdown that shaved off an estimated 1.5%. Without that drag, growth could have approached 6.5%—a figure rarely seen in modern economic history.

Why the “Biggest Refund Season Ever” Is Expected

The most immediate benefit for households may arrive this tax season. According to administration estimates, Americans could see nearly $200 billion in tax refunds in 2026.

The reason: midyear implementation of policies such as no tax on tips, no tax on overtime, and reduced taxes for seniors meant IRS withholding tables were not fully adjusted. As a result, many workers will receive those benefits retroactively in their refunds.

Hassett emphasized that this refund surge would act as a non-inflationary stimulus, supported by expanding supply and more than $18 trillion in new factory construction.

Federal Reserve Independence Remains Intact

Amid questions surrounding scrutiny of Federal Reserve Chair Jay Powell, Hassett reiterated the administration’s respect for both Fed independence and the Justice Department.

President Trump, he said, has no intention of removing Powell and is focused solely on achieving lower interest rates—not undermining institutional stability.

A Defining Year Ahead

With tax refunds rising, borrowing costs easing, and homeownership potentially becoming more accessible, the Trump administration believes 2026 could test—and validate—what it calls a new “golden age” for the U.S. economy.

Whether those projections materialize will depend on execution, market response, and consumer confidence—but expectations inside the White House are unmistakably high.

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