Taxpayers can expect bigger-than-usual refunds when they file their 2025 tax returns this year, largely because of provisions in the One Big Beautiful Bill Act (OBBBA). Here’s a look at the the seven major tax cuts that took effect in 2025 under the OBBBA and that could boost your tax refund this year, according to the Tax Foundation: Maximum child tax credit increase of $200. Standard deduction increase of $750 for single filers and $1,500 for joint filers. State and local tax (SALT) deduction ca ...

Many Americans can expect a windfall tax refund this year, in part due to tax cuts included in the bill that President Donald Trump signed on July 4. It added several tax breaks for 2025, but the IRS did not change how much it was holding back from paychecks — meaning many workers overpaid and will get additional tax back (1). Must Read The IRS will issue these refunds electronically. The agency’s taxpayer advocate says it will temporarily freeze tax refunds for those who don’t provide direct deposit i ...

Core Insights - Taxpayers often experience confusion or frustration when their tax refunds are smaller than expected or absent, despite little change in income [1] Group 1: Common Refund Surprises - Expecting a refund every year is the most common surprise, as refunds are based on mathematical calculations rather than past experiences [2] - Changing jobs frequently leads to refund surprises due to potential mistakes in completing withholding forms, which can alter tax withholdings without immediate visibility [4] - Earning more money does not guarantee a larger refund; higher income can push taxpayers into a new tax bracket, resulting in a smaller refund or unexpected tax liabilities [5]

Core Insights - The Internal Revenue Service (IRS) is facing significant challenges this tax season, including short staffing and the transition from paper checks to digital refunds [1] Group 1: Staffing Issues - The IRS has experienced a 27% reduction in its workforce over the past year, following a period of increased staffing due to funding from the Inflation Reduction Act [5] - Leadership turnover and the implementation of complex tax law changes are compounding the staffing challenges faced by the IRS [6] Group 2: Transition to Digital Refunds - The report highlights that while most refunds were issued electronically last year, taxpayers without direct deposit information may face delays of up to six weeks for their refunds [2] - Vulnerable taxpayers, including those without bank accounts or who are elderly or disabled, may be disproportionately affected by the IRS's move away from paper checks [3] - Average refunds last year were $3,167, which is a significant amount for many households [3] - Only 6% of taxpayers filed their returns on paper, and just 7% received their refunds via paper check [4]

Core Insights - The IRS is now accepting tax returns for the 2025 tax year, and submitting taxes early may expedite refunds [1] - Tax refunds should not be viewed as free money; they represent funds that were previously loaned to the government without interest [3][4] Financial Strategies - Instead of spending tax refunds on non-essential items, individuals are encouraged to use the funds to improve their financial situation [3][4] - Suggested uses for tax refunds include adding to emergency funds, boosting retirement savings, paying off high-interest debts, and addressing minor home or car repairs to prevent larger costs later [7]

Core Insights - The One Big Beautiful Bill Act (OBBBA) is expected to lead to the largest tax refund season in history, with Treasury Secretary predicting refunds between $100 billion and $150 billion [1] - The average tax refund is projected to increase by up to $1,000, depending on individual tax situations [2] Tax Landscape Changes - While some Americans may receive larger refunds, cuts to programs like SNAP and Medicaid could negatively impact overall household finances [4] - Households in the lowest income decile may see a reduction of about $1,200, or 3.1% of projected income, while those in the top decile could see an increase of approximately $13,600, or 2.7% of their projected income [5] Tax Breaks and Deductions - The maximum child tax credit will rise from $2,000 to $2,200, and a new seniors deduction of $6,000 (or $12,000 for married couples) will be introduced for those aged 65 and over [5] - Additional tax breaks include no tax on qualified tips up to $25,000, no tax on overtime up to $12,500 (or $25,000 for joint filers), and no tax on car loan interest up to $10,000 for qualified U.S.-built vehicles, with phase-outs at higher income levels [6]

Core Insights - The IRS anticipates that 164 million individuals will file tax returns by April 15, with an average refund projected to be $1,000 higher than last year's average of $3,167 due to changes in tax law [1] Group 1: Tax Filing and Refunds - The IRS processed over 165 million individual income tax returns last year, with 94% submitted electronically [1] - Taxpayers filing electronically can expect to receive their refunds in 21 days or less, while paper returns may take four weeks or more [3] - The IRS advises against relying on receiving refunds by specific dates, especially for major purchases or bill payments [4] Group 2: IRS Workforce and Challenges - The IRS has experienced a significant reduction in workforce, starting 2025 with approximately 102,000 employees and ending with around 74,000 due to firings and layoffs [3] - The national taxpayer advocate has warned that the 2026 tax filing season may present challenges for taxpayers encountering issues, attributed to the exodus of IRS workers since the Trump administration [2] Group 3: Refund Status and Tools - Taxpayers can check the status of their refunds using the online tool "Where's My Refund?" within 24 hours of e-filing or generally within four weeks of filing a paper return [4] - The IRS2Go app and IRS Individual Online Account are additional resources for checking refund status [5] - To qualify for a refund, taxpayers must file a return, and they have three years to claim a tax refund [5]

Core Insights - The tax season began on January 26, with many Americans expecting larger tax refunds this year, potentially up to $1,000 higher than previous years [1][2]. Tax Cuts - The increase in tax refunds is attributed to the One Big Beautiful Bill Act (OBBBA), which introduced several tax cuts, including new deductions for seniors, overtime pay, tips, and car loan interest, as well as an increase in the standard deduction [2][4]. - The state and local tax deduction cap has increased from $10,000 to $40,000, benefiting taxpayers in high-tax states [5]. Tax Withholding - The IRS did not update its federal income tax withholding tables for 2025, leading to many W-2 employees potentially overpaying their taxes throughout the year [2][6]. - Taxpayers may receive larger refunds because they had more withheld than necessary due to the unchanged withholding tables despite new deductions being available [7]. Refund Comparisons - In the previous tax season, the IRS issued over 103 million refunds with an average amount of $3,167 [8]. - The actual refund amount will vary based on individual circumstances, with higher-income households potentially benefiting more from the new deductions [9]. Recommendations for Tax Refund Usage - Taxpayers are advised to use their refunds wisely, such as paying down high-interest debt or boosting savings in a high-yield savings account [11][12].

Core Insights - The IRS has begun accepting tax returns for the 2025 tax year, with a filing deadline of April 15 [1][7] Group 1: Filing Tips - Filing early is recommended to allow ample time for calculating deductions and potentially receiving tax refunds sooner, while also reducing the risk of tax fraud [3][4] - Being organized is crucial for a smooth tax-filing process, including maintaining a checklist of necessary documents such as W-2 and 1099 forms [5][6] - Seeking professional help is advised due to recent tax changes introduced in 2025, which may affect individual returns [8][9]

Core Insights - The average tax refund in 2025 was $3,052, totaling nearly $312 billion, indicating that many taxpayers are overpaying taxes throughout the year [1] - Overpaying taxes is likened to providing an interest-free loan to the government, which could be better utilized for personal financial growth [2] - Financial planning should focus on making money work for individuals rather than the government, through investments or savings [4] Tax Refund Implications - A large tax refund suggests excessive withholding from paychecks or overpayment of estimated taxes [5] - The objective should be to minimize the refund amount to near zero, allowing taxpayers to retain more money throughout the year [5] Adjusting Withholding - Updating Form W-4 and using the IRS Withholding Estimator can help taxpayers determine appropriate withholding amounts based on their financial situation [6] - Life changes such as marriage, divorce, or new employment should prompt a review of withholding to ensure accuracy [6] - Self-employed individuals should adjust estimated tax payments quarterly to avoid overpayments [6]