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Tax season officially kicked off on Jan. 26, which means many Americans are anticipating a tax refund windfall in the coming months. And some taxpayers may see a bigger return than expected this year.<\/p>\n
The Tax Foundation estimates the average refund could be up to $1,000 higher this year.<\/p>\n
The reason for the potential increase is two-fold. For one, the One Big Beautiful Bill Act (OBBBA) was passed into law, bringing several new tax cuts for filers. At the same time, the IRS did not update its federal income tax withholding tables for employers, so many W-2 employees may have paid more than necessary in 2025.<\/p>\n
Taxpayers have until April 15 to file their 2025 tax returns, with the IRS expecting to receive roughly 164 million individual tax returns this year.<\/p>\n
Read more:<\/em> It\u2019s tax-filing time \u2014 what to know about deductions, ‘no tax on tips,’ and more<\/em><\/p>\n Here\u2019s what to know about your refund, including some smart ways to use it and what to be aware of before you file.<\/p>\n The expected increase in tax refunds this year follows the implementation of the OBBBA in 2025. The law included several tax cuts for Americans that will affect the federal income taxes they owe.<\/p>\n Some of the tax changes that could affect your refund include a new deduction for seniors, deductions for overtime pay and income from tips, a deduction for interest paid toward car loans, an increase in the standard deduction, and more.<\/p>\n One change that could affect a broad number of taxpayers, according to Brian Kearns, CPA, CFP, founder and president of Haddam Road Tax and Consulting, is the state and local tax deduction. Previously, filers who itemized could deduct up to $10,000 in select state and local tax payments from their taxable income; now the cap is $40,000 \u2014 which could be particularly beneficial for people in high-tax states.<\/p>\n How taxes were withheld in 2025, in addition to the tax cuts themselves, is another reason your refund might be larger than expected.<\/p>\n Any tax season, if you\u2019ve had more taxes withheld than what you owe, you\u2019ll receive a refund. The difference this year is that the amount you owe may have gone down while you continued to have the same amount withheld throughout the year.<\/p>\n \u201cWithholding was done assuming everything\u2019s taxable as it was, and now you have this additional deduction,\u201d said Damien Martin, CPA, partner at EY Private Tax.<\/p>\n That\u2019s because when the OBBBA was passed into law, the IRS did not update withholding tables. Some taxpayers became eligible for additional deductions but were still paying more toward taxes with each paycheck.<\/p>\n By the end of 2025, the IRS had issued more than 103 million refunds (for the 2025 filing season) at an average amount of $3,167.<\/p>\n In a December year-end address from the White House, President Trump claimed that this spring would be \u201cthe largest tax refund season of all time.\u201d In an interview at the World Economic Forum in January, Treasury Secretary Scott Bessent said that for working families, each wage earner could see up to $1,000.<\/p>\n But the real difference will depend on your individual return. For example, while state and local tax deductions may have the biggest impact on higher-income households, high earners could also be phased out from some deductions based on income. On the other hand, low-income filers who already have little tax liability may not see a big difference either.<\/p>\n Everyone\u2019s individual circumstances are different.<\/p>\n \u201cAny time you have changes, they mean different things for different people,\u201d Martin said. \u201cEverybody\u2019s situation is unique.\u201d And if you don\u2019t get as much back on your tax return as you may have expected, don\u2019t panic. \u201cIt doesn\u2019t necessarily mean it\u2019s wrong if your answer is coming out different than other people\u2019s, because there are a lot of variables that go into it.\u201d<\/p>\n If you\u2019re unsure about what to expect before you file, consider speaking with a tax expert.<\/p>\n \u201cFind a CPA; talk to somebody to get at least some general guidance,\u201d Kearns said. \u201cThis is going to be an interesting year. There are a lot of different things out there, some of which have never been done before. It\u2019s new for everyone.\u201d<\/p>\n