The IRS has reported that the number of tax returns received so far this tax season is lower compared to last year, but refunds have seen a significant increase. According to IRS data, the average refund through Feb. 6 was $2,290, up by almost 11% from the same period in 2025. However, total returns received have dropped by 5.2%. The IRS explained that refund numbers are expected to rise further as refunds claiming the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) are required by law to be held until Feb. 15.
The agency stated that the current refund numbers do not include millions of EITC and ACTC refunds for these taxpayers, which means that the refund numbers expected to be released on Feb. 27 for refunds processed through Feb. 20 are anticipated to be higher. This news should be particularly encouraging for Americans facing challenges due to rising prices and a slowing job market, as higher refunds can serve as a financial boost.
Analysts like Mihir Bhatia from Bank of America believe that higher refunds will benefit consumers, especially lower-income consumers who use tax refunds for debt repayment and significant purchases. The IRS emphasizes that combining direct deposit with electronic filing is the quickest way to receive a refund, with most refunds issued in less than 21 days for taxpayers who filed electronically and opted for direct deposit.
To further streamline the refund process, the IRS has been phasing out paper checks since last September in favor of direct deposit. The agency highlighted that paper checks are significantly more likely to be lost, stolen, altered, or delayed compared to electronic payments. Direct deposit also eliminates the risk of a refund check being returned as undeliverable.
Taxpayers can track the status of their refund using the IRS “Where’s My Refund” tool, which provides updates on when the IRS received the tax return, approved the refund, and issued the refund. Refunds typically reach the recipient’s account within five days of approval. For those who filed paper returns and are expecting a refund, processing may take four weeks or longer.
For individuals who claimed the EITC or ACTC, refunds cannot be released until mid-February for early filers. These taxpayers may have to wait until around March 3 to see their refunds deposited into their bank accounts or onto debit cards, provided they chose direct deposit and there are no issues with the tax return.
If a taxpayer does not have a bank account, the FDIC website or the National Credit Union Administration’s Credit Union Locator Tool can help find a suitable banking option. Opening a bank account is usually a quick process, and alternative electronic payment options may be available through tax preparers. Additionally, taxpayers may consider depositing their refund onto a reloadable prepaid debit card or mobile app, ensuring that the card or app can receive direct deposits and verifying the routing and account numbers.
Financial experts advise recipients of substantial refunds to manage their funds responsibly. Suggestions include splitting the refund among multiple accounts for immediate use and future savings, planning in advance how to allocate the refund to reduce overspending, prioritizing debt reduction and emergency savings, and avoiding lifestyle upgrades that could jeopardize financial health.
Overall, the IRS’s data on tax refunds indicates a positive trend for taxpayers, offering a potential financial boost during challenging times. By leveraging electronic filing and direct deposit, taxpayers can expedite the refund process and ensure a secure and efficient delivery of funds.
