Churches Should Expect a Giving Surge in Q1
By Raul Rivera
As tax season approaches for 2025 returns—filed in early 2026—millions of Americans are poised for a pleasant surprise: significantly larger tax refunds. Thanks to the One Big Beautiful Bill Act (OBBBA), signed into law in July 2025, retroactive tax changes have created a scenario where many taxpayers overpaid throughout the year. Payroll systems couldn't adjust in time, leading to over-withholding based on pre-law rules. The result? A projected "refund surge" that could inject billions into household budgets right when filing begins.
Average refund of $3,743.00
According to JP Morgan forecasts, the average tax refund could reach $3,743, about $500 higher than recent years—a 15% increase. This isn't just averages; for many qualifying households, the bump could be even more substantial. Experts describe it as a "mini stimulus," potentially boosting economic activity in the first quarter of 2026.
Why Larger Refunds?
A tax refund occurs when more taxes are withheld from paychecks than ultimately owed. The OBBBA introduced new deductions and credits effective January 1, 2025, but passed mid-year. Employers continued withholding based on old rules, creating overpayments refunded in 2026.
Key provisions driving this:
- Seniors' Bonus Deduction — Taxpayers 65+ get an extra $6,000 deduction ($12,000 for joint filers), on top of existing benefits. Many churchgoers fall into this demographic, often faithful tithers.
- No Tax on Tips — Up to $25,000 in tips deductible (phases out at higher incomes). Service workers, including many in the hospitality industry, qualify—even if they take the standard deduction.
- No Tax on Overtime — Deducts the premium portion of overtime pay (e.g., the "half" in time-and-a-half), up to $12,500 single/$25,000 joint. About 60% of Americans in overtime-eligible jobs benefit.
- Increased Child Tax Credit — From $2,000 to $2,200 per child, helping families.
- Higher SALT Deduction Cap — From $10,000 to $40,000 for state/local/property taxes.
- Car Loan Interest Deduction — Up to $10,000 for interest on loans for U.S.-assembled vehicles originated in 2025.
These above-the-line deductions mean broader eligibility, without the need to itemize. Retroactive application ensures that over-withheld taxes are returned as refunds.
Implications for Churches: Expect a Q1 Giving Boost
Churches and ministries should anticipate this windfall translating into increased giving, particularly from January to March 2026. Tax refunds often arrive between February and April, aligning with early-year budgeting efforts.
Why target giving?
- Stewardship Opportunity → Many Christians view refunds as unexpected blessings, ideal for tithes, offerings, or special projects. Historical refund seasons have shown spikes in charitable contributions.
- Historical Patterns → Refunds fund debt payoff, savings, or generosity. Faith communities often see uplifts—some report 10–20% Q1 increases during strong refund years.
- Demographic Overlap → Seniors (extra deduction), families (child credit), and hourly workers (tips/overtime) are core church attendees. Tipped workers and overtime earners—often from middle- to lower-income backgrounds—prioritize giving.
This surge could provide timely relief for churches facing post-holiday dips or year-end shortfalls. An extra $500+ average per household, across millions, means meaningful aggregate impact.
A Unique Opportunity for Leaders Discerning a Church Launch
This refund surge may also have an impact beyond giving patterns. For leaders who are prayerfully considering launching a church, larger-than-normal refunds could lower the barrier to taking the next step. Some pastors delay launching their ministry because of initial setup costs, such as incorporation fees, ministry supplies, equipment, facility deposits, insurance, or simply the financial pressure of stepping out in faith. A larger refund can help create breathing room and provide practical resources that make the decision feel more attainable.
In other words, these refunds may not only strengthen existing churches, they may also help empower future church planters who have already been discerning a call but needed financial clarity to move forward.
How Churches Can Prepare and Encourage Generosity
- Educate Congregations — Sermons, newsletters, or classes on biblical stewardship of windfalls (e.g., Proverbs 3:9–10 on honoring God first).
- Highlight Needs — Share vision for 2026 ministries, missions, or building funds. Tie it to refund timing.
- Facilitate Easy Giving — Promote online tools, text-to-give, or refund-direct options.
- Express Gratitude — Thank donors and report impact to build momentum.
- Plan Budgets Accordingly — Conservatively forecast Q1 revenue bump for initiatives.
In uncertain times, this refund surge offers provision for families and the Church. By stewarding it faithfully, congregations strengthen God's work. As refunds flow in, prepare to celebrate increased generosity, glorifying Him.
StartRIGHT with StartCHURCH
As churches prepare for a potential surge in giving, it is just as important to ensure their legal and financial foundation is in order. StartRIGHT helps churches confirm that their structure, compliance, and governance are properly established before increased funds begin flowing. This includes guidance with church incorporation, pastor ordination, and securing federal 501(c)(3) tax-exempt status.
From establishing proper leadership credentials through ordination to ensuring the church is recognized as a charitable organization by the IRS, StartRIGHT helps church leaders avoid costly missteps while positioning their ministry for long-term stability. When generosity increases, churches that are properly formed and compliant are able to steward those resources with confidence and clarity.
To learn how StartRIGHT can help your church prepare for what is ahead, call 770-638-3444 to speak with a church compliance specialist.