Millions of Americans have already started filing their federal tax returns, and many have received their refunds. The IRS has reported an increase in the average tax refund compared to last year. While tax season is still ongoing, the numbers suggest that many taxpayers are receiving higher refunds than expected.
But why are refunds higher this year? And what changes have contributed to the increase? Let’s break it all down.
Refunds
As of the fifth week of the 2025 tax season, the IRS has refunded a total of $124.804 billion. This marks an 8.1% increase compared to the same time last year. Individual refunds have also seen a rise.
Here’s a comparison of the average refund amount over the last two years:
| Tax Year | Average Refund | Direct Deposit Refund |
|---|---|---|
| 2024 | $3,182 | $3,244 |
| 2025 | $3,382 | $3,436 |
For those who opted for direct deposit, the increase is even more noticeable, with a nearly 6% rise in refund amounts.
Processing
Although refunds are higher, the IRS has actually processed fewer returns this year. Compared to the previous tax season, the agency has seen a 3.6% drop in processed returns.
Additionally, online visits to IRS.gov have dropped significantly—by 43.2%. This could be due to improved tax software, alternative online resources, or simply taxpayers filing later in the season.
Resources
Despite higher refunds, the IRS is facing financial and workforce challenges. Like many federal agencies, the IRS has been dealing with budget cuts and staff reductions. The previous administration proposed reducing the agency’s workforce through layoffs, incentives, and attrition.
With fewer resources, processing times and customer service availability may be impacted. However, the agency expects filing numbers to stabilize as the April 15 deadline approaches.
Inflation
One of the main reasons for the increase in refunds is inflation adjustments. The IRS has raised both tax brackets and the standard deduction to account for inflation, effectively lowering tax burdens for some individuals.
For the 2024 tax year, the standard deduction has increased as follows:
| Filing Status | 2023 Standard Deduction | 2024 Standard Deduction | Increase |
|---|---|---|---|
| Single | $13,850 | $14,600 | $750 |
| Married (Joint) | $27,700 | $29,200 | $1,500 |
| Head of Household | $20,800 | $21,900 | $1,100 |
These changes allow taxpayers to deduct more of their income, resulting in lower taxable income and, in many cases, larger refunds.
Filing
Tax season officially began on January 27, and the final day to file without penalties is April 15, 2025. If you haven’t filed yet, there’s still time to take advantage of deductions, credits, and possible refund increases.
If you’re expecting a refund, filing sooner rather than later can help ensure you get your money back quickly. Direct deposit remains the fastest and safest way to receive your refund.
With tax brackets adjusted and standard deductions increased, many Americans are seeing slightly larger refunds this year. While the IRS is dealing with staffing and budget constraints, the numbers suggest that taxpayers are benefiting from inflation-related adjustments. If you’re still waiting to file, it’s worth checking how these changes impact your return.
FAQs
Why are refunds higher in 2025?
The IRS adjusted tax brackets and deductions for inflation, reducing taxable income.
What is the average refund in 2025?
The average refund is $3,382, while direct deposit refunds average $3,436.
Has the IRS processed fewer returns this year?
Yes, IRS processing is down 3.6% compared to last year.
When is the tax filing deadline for 2025?
The deadline to file without penalties is April 15, 2025.
Why have visits to IRS.gov dropped?
Online visits are down 43.2%, possibly due to better tax software or later filings.
