The IRS has shared some good news: people who paid taxes for the year 2024 will see larger tax refunds when they file in 2025. On average, refunds are around $3,382, which is 6.3% more than before.
This increase is mostly because of adjustments made to keep up with inflation, which helped lower taxes for lots of people.
The tax filing period for this season kicked off on January 27, 2025, and wrapped up on April 15. At first, the refunds seemed smaller, but as delays were sorted out, especially for tax credits that give extra money for earnings and for having children, the refunds ended up being larger than expected.
Let's talk about why refunds are getting a boost:
- The amount the government doesn't tax went up, from $13,850 to $14,600 for individuals.
- The levels of income that fall into different tax rates were adjusted.
By the end of February 2025, over 68 million tax returns had been processed, with more than half getting refunds. Although the first refunds given out in February were about $2,169, they jumped to $3,453 the following week, thanks to the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC).
A law called the PATH Act makes the IRS wait till mid-February to give refunds linked to those special credits, which is why the amounts changed later on.
The IRS mentions that early refund figures can be misleading and it's important to wait till later in the tax season to see the full picture.
Here are some key numbers for refunds over three weeks:
- Week of Feb 14, 2025: $2,169 (down 32.4% from last year)
- Week of Feb 21, 2025: $3,453 (up 7.5% from last year)
- Week of Feb 28, 2025: $3,382 (up 6.3% from last year)
Compared to the same time last year, refunds are up from $3,182 to the current amounts. However, experts say the average might still change a little as the season ends, but overall, the trend of higher refunds looks solid.
The deadline for filing your taxes is April 15, 2025, but you can ask for an extension until October if you need it. Just remember, if you owe money in taxes, you still need to pay by April to avoid late fees. People living in areas hit by disasters might get extra time to file.
Why are some refunds delayed?
Refunds might be bigger this time because some employers didn't update their tax withholding charts, meaning they took out too much money from people's paychecks. A tax expert recommends checking these withholdings every year.
Also, the Child Tax Credit, which can be up to $1,700 for each child, helped increase the refunds that families received.
However, if you decided to list specific expenses like mortgage interest or donations (called itemizing deductions), you might not see a bigger refund, because a standard amount that the government allows you to not pay taxes on (standard deduction) was raised, which was more beneficial for most.
Even though it seems like many people will get larger refunds, the IRS advises everyone to not expect the same result. Your refund can change depending on your personal situation, like getting married, having a baby, or changes in how much money you make.
Remember, dealing with taxes can be complex, and everyone's situation is different. It's always a good idea to consult with a tax professional for advice on your specific circumstances.
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