Tax season officially began on Jan. 26, marking the start of a period where many Americans eagerly anticipate a tax refund windfall in the upcoming months. This year, taxpayers may be in for a pleasant surprise as the Tax Foundation estimates that the average refund could be up to $1,000 higher than in previous years.
The increase in potential refunds can be attributed to two main factors. Firstly, the One Big Beautiful Bill Act (OBBBA) was passed into law, introducing several new tax cuts for filers. Additionally, the IRS did not update its federal income tax withholding tables for employers in 2025, leading many W-2 employees to have overpaid their taxes throughout the year.
Taxpayers have until April 15 to file their 2025 tax returns, with the IRS expecting around 164 million individual tax returns to be submitted this year.
The implementation of the OBBBA in 2025 brought about several tax cuts for Americans, impacting the federal income taxes they owe. Some of the changes that may affect your refund include a new deduction for seniors, deductions for overtime pay and income from tips, a deduction for interest paid toward car loans, an increase in the standard deduction, and more.
One significant change that could impact a large number of taxpayers is the increase in the state and local tax deduction cap from $10,000 to $40,000. This change could particularly benefit individuals residing in high-tax states.
The way taxes were withheld in 2025, combined with the tax cuts introduced by the OBBBA, is another reason why your refund may be larger than expected. If you had more taxes withheld than what you owe, you will receive a refund. However, with the introduction of additional deductions, some taxpayers may have overpaid their taxes while continuing to have the same amount withheld from their paychecks.
According to data from the IRS, over 103 million refunds were issued for the 2025 filing season, with an average amount of $3,167.
In a year-end address from the White House, President Trump predicted that this spring would be “the largest tax refund season of all time.” Treasury Secretary Scott Bessent mentioned that working families could see up to $1,000 per wage earner.
It’s important to note that the actual difference in your refund will depend on your individual return. While certain deductions may have a significant impact on higher-income households, high earners could be phased out from certain deductions based on their income level. On the other hand, low-income filers with minimal tax liability may not see a substantial difference in their refunds.
Individual circumstances vary, and tax changes affect each person differently. Consulting with a tax expert before filing can provide valuable guidance and ensure you are maximizing your refund.
Regardless of the amount of your tax refund this year, there are several smart ways to utilize it for long-term benefit. Consider using the extra funds to pay down high-interest debt, boost your savings, or invest in your financial future.
Before filing your taxes, be sure to take advantage of resources available for the current tax season. After filing, you can track the status of your refund using the IRS’s Where’s My Refund tool, which updates your refund status 24 hours after filing.
Remember, tax season is a unique time for everyone, and seeking professional advice can help you navigate any uncertainties and make the most of your tax refund.
