What's Happening?
The IRS has announced that Americans could receive the largest tax refunds in U.S. history this filing season, attributed to provisions in President Trump's Working Families Tax Cuts Act. The average refund is expected to increase by $1,000 or more, with
projections suggesting a rise of 15 to 30 percent compared to previous years. The Tax Foundation estimates the average refund check will be $3,800, up from $3,052 in 2024. The IRS has begun accepting 2025 tax returns as of January 26, with an expected 164 million individual returns to be filed. Taxpayers have until April 15 to file their returns and pay any taxes due. The IRS is encouraging the use of direct deposit for refunds, as it is faster and more secure than paper checks.
Why It's Important?
This development is significant as tax refunds represent a major financial event for many Americans, with approximately 75 percent of taxpayers receiving refunds annually. The increase in refund amounts could provide a substantial financial boost to households, potentially impacting consumer spending and the broader economy. The changes in tax law, including new deductions for seniors and expanded state and local tax deductions, may particularly benefit older Americans and homeowners. The emphasis on direct deposit reflects a shift towards more secure and efficient refund processing, reducing the risk of lost or delayed payments.
What's Next?
Taxpayers who claimed the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) will experience a delay in receiving their refunds until at least March 2, as the IRS holds these returns to check for fraud. The IRS expects most EITC and ACTC-related refunds to be available by March 3 for those who opted for direct deposit. Taxpayers can track their refund status using the IRS's 'Where's My Refund?' tool. The IRS continues to phase out paper checks, encouraging electronic filing and direct deposit to streamline the refund process.
