Tax season 2025 has thrown a curveball at millions of Americans, average refunds are down by 32.4% compared to last year.
If you were expecting a big payday from the IRS, you might be in for a surprise. But why are refunds lower, and what can you do to maximize your return? Here’s everything you need to know.
What’s Causing the Drop in Refunds?
As of February 14, 2025, the average tax refund issued so far is $2,169, a steep decline from last year’s $3,207 at the same point. The IRS attributes this to several key factors:
- Fewer tax returns filed so far – The filing season isn’t over, and many high-refund returns (especially those claiming credits) haven’t been processed yet.
- Delays in Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) payments – These credits require extra verification under federal law and are usually processed later in the season.
- Changes in tax law or deductions – Some temporary tax breaks from previous years have expired, affecting refund totals.
Can You Still Get a Bigger Refund? Yes, Here’s How
While the initial refund data looks discouraging, there are ways to boost your tax refund and ensure you’re not leaving money on the table.
1. Claim All Eligible Tax Credits
The IRS confirms that many higher refund filers haven’t filed yet, primarily those who qualify for Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC). If you’re eligible, these credits could add thousands to your refund:
- EITC: Up to $7,430 for eligible filers.
- CTC: Worth up to $2,000 per qualifying child.
2. File Electronically & Opt for Direct Deposit
The fastest way to get your refund? File electronically and choose direct deposit. The IRS typically processes e-filed returns within 21 days, while paper returns take six weeks or longer.
3. Avoid Common Filing Mistakes
Tax experts warn that small mistakes can delay your refund or even result in a lower payout. Here’s what to double-check:
- Make sure your Social Security number is correct.
- Report all sources of income, including freelance work or gig jobs.
- Check for deductions you may qualify for, such as student loan interest or home office expenses.
4. Watch Out for Tax Scams
The IRS just released its 2025 ‘Dirty Dozen’ list of tax scams, warning taxpayers to stay alert for fraudulent schemes that promise higher refunds or ask for personal financial details. Always file through a trusted tax professional or official IRS e-filing services.
When Will You Get Your Refund?
- For most filers: Expect your refund within 21 days if you file electronically with direct deposit.
- If you’re claiming EITC or ACTC: Refunds are typically delayed until at least March 3, 2025 due to extra fraud protection measures.
Final Thoughts: Don’t Panic, Be Proactive
Yes, refunds are smaller this year, but that doesn’t mean you’re out of options. Filing smart, claiming all credits, and avoiding mistakes can help you get the biggest refund possible. The IRS suggests that numbers will even out later in the season, meaning there’s still time to maximize your return.
If you haven’t filed yet, now’s the time to take action and ensure you’re getting every dollar you’re owed!
