Despite anticipating tax refunds in 2025, taxpayers were surprised by this year’s results. According to the IRS, refund checks have declined dramatically for everyone this year. The article examines the impact on taxpayers as well as the reasons for this year’s decline in refunds.
In contrast to the $3,207 tax refund from the previous year, the average tax refund on February 14 was $2,169. The amount has significantly decreased, and many taxpayers are concerned about their upcoming refund payments.
The decline in IRS refunds can be attributed to a number of tax law changes as well as the expiration of specific pandemic tax incentives. Taxpayer refunds containing the Additional Child Tax Credit (ACTC) or Earned Income Tax Credit (EITC) will be distributed throughout the season because they were not included in the initial filing data.
IRS will pay out less money in 2025 for American taxpayers
Individual returns have decreased as a result of the expiration of federal tax incentives that increased money refunds during the pandemic. Taxes provided large refunds to many American taxpayers during the epidemic, but they were eliminated as credits in the 2025 tax filing season.
The discontinuation of these enhanced tax credits has resulted in lower average tax refund amounts. The decline in the number of tax returns submitted for processing is one factor contributing to the lower overall totals.
In comparison to the same period last year, the Internal Revenue Service received 7.7% fewer returns and processed 7.6% fewer returns. Because of the slow start to the tax season, average tax refunds this year appear to be lower.
Elon Musk’s Department of Government Efficiency (DOGE) is leading a government efficiency initiative that will result in significant staffing reductions at the IRS. Concerns about the agency’s staff reductions raise questions about how quickly tax returns will be processed and refunds issued this season.
Due to the uncertainty surrounding the full impact of reinforcing personnel reductions, taxpayers must confirm the accuracy of their returns to avoid delays. According to IRS experts, taxpayers can track their refunds using the Where’s My Refund? app.
For example, the IRS2Go app and the “Where’s My Refund” function allow you to track the status of your return. The tools provide you with continuous access to information about the status of your refund every day, 24 hours a day.
Because of a staffing shortage and high phone volume, the IRS should not be contacted about your rebate. As the remaining unsubmitted filers’ tax returns are processed, the IRS expects the reported average refund amounts to level off.
Before reaching their final average amount at the end of April 15, refund data from the filing season show a wide range of outcomes. By February 14, the IRS had received 33 million individual tax returns, out of the 140 million expected to be filed by April 15.
Many people have not filed their taxes with the IRS, so the final average refund estimate will be influenced by the unprocessed tax returns. Furthermore, taxpayers who expected large refunds in 2025 were disappointed with this year’s lower refund amounts.
Because pandemic tax benefits have been eliminated and the filing season began later than expected, current refunds are significantly lower than 2024 levels. Staffing reductions at IRS institutions will have an additional impact on return processing and refund issuance.
Before filing their forms, taxpayers should ensure that all of the information is correct so that they can check the status of their refunds using the IRS’s online tools.
Although the average refund value may increase as more returns are processed, the total amount of the refund may be lower than the previous year, so those expecting larger tax refunds should revise their budget projections.
