Tax refund could be smaller than expected this season. Here’s why
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With the federal tax deadline less than a month away, tax refunds are higher on average than last year, but the change was smaller than some early estimates.
One January versionThe White House said average tax refunds could increase by “$1,000 or more,” citing several media reports about a study by investment bank Piper Sandler in early October.
The average payment change so far has been smaller than the $1,000 estimate, according to IRS filing season data.
As of March 6, average tax refund That figure rose to $3,676, from $3,324 at the same time last year, the IRS reported last week. This figure is based on approximately 60.7 million individual returns, out of the 164 million returns expected by April 15.
How might tax refunds change?
Your tax refund or balance due this season may depend on a variety of factors, including which new tax breaks will affect your status in 2025. Experts say that in addition to salary cuts, there are also income and lifestyle changes.
“I can’t really say refunds are much higher than they used to be,” Tom O’Saben, director of tax content and government relations for the National Association of Tax Professionals, told CNBC.
The average refund amount so far this season rose to $3,804 on Feb. 20, up from $3,453 about a year ago, and then gradually dropped over the next two weeks.
This increase in mid-February is common as payments begin to reflect refunds that include: The refundable portion of the child tax credit known as the earned income tax credit or additional child tax credit or ACTC.
After this jump in February, the average refund is generally Falling steadily through Tax DayThat’s according to a Bipartisan Policy Center analysis of IRS data from the previous four seasons.
Which taxpayers see larger refunds?
In his opening remarks to the House Ways and Means Committee on March 4. hearingRep. Richard Neal, D-Mass., the ranking member, said this season’s tax refund earnings are “much smaller than promised” for the average American.
Later at the same hearing, Social Security Administration commissioner and IRS CEO Frank Bisignano said some filers claiming President Donald Trump’s new tax cuts are already seeing average refunds $775 higher than last year.
These filers claimed Trump’s new cuts Table 1-AThis feeds into individual tax returns, he said. This form includes deductions for tip income, overtime earnings, senior citizens, and auto loan interest.
Overall, taxpayers are seeing “larger, faster refunds,” Bisignano said.
As of March 8, almost 45% of tax returns Trump claimed one of the new Schedule 1-A tax breaks this season, the U.S. Treasury Department said.
A higher state and local tax deduction limit, known as SALT, may also result in higher refunds for some. However, to take advantage of the new cap, filers must itemize tax deductions rather than claiming the standard deduction.
Almost through the 2022 tax year. 90% of returns He used the standard deduction based on the most recent IRS data. That same year, approximately 15 million returns were requested from the SALT deduction, which was less than 10% of applications.
