2025's Tax Refunds Are Bigger Than Last Year's, Says the IRS

• Author: Jenny Wolff
• Posted: 2025-03-20

The IRS has shared some good news for those who filed their taxes for the year 2024 in 2025: the average tax refund has grown to $3,382. This is a 6.3% increase from before. 

Why are refunds bigger? It's mainly because the IRS made some changes to account for the rise in living costs, helping taxpayers save a bit more money than usual.

The official tax-filing season started on January 27, 2025, and wrapped up on April 15. Even though early numbers made it seem like people would get less money back, things changed for the better once the IRS processed extra tax credits like the Earned Income Tax Credit (EITC).
 

How Tax Changes Made Refunds Larger

The reason refunds are up is thanks to some smart adjustments in taxes. For single people, the standard amount you can earn without paying taxes on it went up from $13,850 to $14,600. 

Also, the different levels of income that determine how much tax you pay, known as 'tax brackets,' were tweaked to make sure people whose incomes aren't rising aren't unfairly affected by taxes.

By the end of February 2025, the IRS had gone through 68.4 million tax returns, and more than half ended with people getting money back. 

At first, the IRS was giving back about $2,169 on average, but after they included tax credits for working families and those with kids, that number jumped to $3,453.

There's a law called the PATH Act that caused this delay. It says the IRS can't give out refunds connected to some credits until after mid-February. This explains why at first it might've seemed like people were getting less back.

The IRS wants to remind everyone that every taxpayer's situation is different. Things like marriage, having a child, or changes in how much you earn can all affect your tax refund.
 

Deadlines and How Withholdings Affect Refunds

Taxpayers had until April 15, 2025, to file their taxes. If they needed more time, they could ask for an extension until October, but any taxes owed had to be paid by April to avoid extra fees. People affected by natural disasters might have had longer to file.

One big reason why some folks might see a bigger refund is that many employers didn't change how much tax they take out of paychecks after the tax bracket updates. 

If you haven't updated your W-4 form at work, you might be paying too much tax during the year and will get more money back after filing your taxes.

For families, the Child Tax Credit, which was up to $1,700 per child in 2024, helped boost refunds too. However, for people who chose to list every deduction they could (like large donations or mortgage payments), the results varied. 

Because the standard deduction was higher, it often made more sense to take that instead of listing all deductions separately. In 2024, 87% of filers went with the standard deduction.

So while it looks like people are getting more money back from their 2024 taxes in 2025, the IRS advises not to assume this happens for everyone. Your refund depends on your own tax situation, which can change year to year.

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