The 2025 tax season is proving to be more rewarding for millions of Americans, as the IRS officially confirms average tax refunds are up by more than $300 compared to last year. Early filers are receiving refunds averaging $2,065, an 18% increase from the 2024 average of $1,741.
This boost is driven by inflation-related adjustments, enhanced tax credits, and new federal initiatives aimed at easing the financial burden on households. If you’re looking to increase your refund this year, understanding these changes is essential. This article breaks down what’s new, who qualifies, and how to avoid common filing errors.
Why Are 2025 Refunds Bigger?
1. Inflation-Based Adjustments to Deductions and Brackets
To offset inflation, the IRS made several upward adjustments that directly reduce how much income is taxed:
- Standard deduction for single filers: Increased to $14,600 (from $13,850)
- Standard deduction for married couples filing jointly: Increased to $29,200 (from $27,700)
- Marginal tax brackets: Shifted upward, meaning less income is taxed at higher rates
These inflation-based increases mean more income is sheltered from taxes, resulting in larger refunds for most taxpayers.
2. Expanded Tax Credits for Families and Low-Income Workers
Several key credits have been enhanced for 2025, boosting refunds for those who qualify:
- Child Tax Credit: Still up to $2,000 per child, with $1,700 now refundable through the Additional Child Tax Credit (ACTC)
- Earned Income Tax Credit (EITC): Increased to $8,046 for families with three or more children
- Adoption Credit: Now up to $16,810 per child
- Clean Vehicle Credit: Up to $7,500 for new electric vehicles and $4,000 for used ones, subject to income limits and eligibility criteria
How to Maximize Your Refund in 2025
Claim All Eligible Tax Credits
To get the biggest refund possible, make sure to claim every credit you qualify for:
| Credit | Maximum Benefit | Key Eligibility Criteria |
|---|---|---|
| Child Tax Credit | $2,000 per child | Children under 17; income ≤ $200,000 (single) / $400,000 (joint) |
| Earned Income Tax Credit | $8,046 | Income ≤ $63,398; age 25–65 (if no children) |
| Adoption Credit | $16,810 | Modified AGI ≤ $252,150; applies to qualified adoption costs |
| Clean Vehicle Credit | $7,500 / $4,000 | Income limits apply; vehicle must meet IRS specifications |
Use the IRS’s Interactive Tax Assistant to confirm eligibility for each credit.
Contribute to Retirement and Health Accounts
Lower your taxable income by contributing to tax-advantaged accounts:
- IRA Contributions: Up to $7,000 ($8,000 if age 50+)
- Health Savings Account (HSA): Up to $3,300 for individuals, or $7,750 for families
These contributions are tax-deductible and may increase your refund while also helping you save for the future.
File Electronically and Use Direct Deposit
The IRS continues to recommend e-filing with direct deposit as the fastest and most secure way to receive refunds. E-filers typically receive their refunds within 21 days, while paper filers may wait four weeks or longer. Filing electronically also reduces the chance of processing errors or delays.
What’s New in the 2025 Tax Season?
IRS Direct File Program Expanded
The IRS has expanded its Direct File program to 25 states, including California, Texas, Florida, and New York. This free platform supports basic federal returns and includes features such as:
- Standard deductions
- Child tax credits
- Health Savings Account deductions
- Retirement savings contributions
Eligibility is limited to those with incomes under $200,000 and no gig or rental income.
1099-K Reporting Threshold Increased
For those using platforms like Venmo, PayPal, or Cash App, the 1099-K reporting threshold has been raised from $600 to $5,000. This change reduces reporting requirements for casual sellers and part-time side hustlers, simplifying the filing process for many.
Stimulus Check Catch-Up Payments
The IRS is releasing $2.4 billion in delayed 2021 stimulus payments, which can still be claimed on your 2024 return if you didn’t receive the full amount. Eligible individuals may receive up to $1,400 per person, but must file by April 15, 2025 to claim these funds.
Avoiding Refund Delays: 5 Crucial Tips
- Wait for All Tax Forms: Ensure you have your W-2s, 1099s, mortgage statements, and any other relevant documents before filing.
- Double-Check Bank Information: Incorrect routing or account numbers can delay your refund.
- Renew Your ITIN: Expired Individual Taxpayer Identification Numbers must be renewed to process your return.
- Be Aware of PATH Act Delays: Refunds that include the EITC or ACTC will be held until at least mid-February.
- Avoid Common Mistakes: Typos, incorrect Social Security numbers, and missing income from freelance work can all delay your return.
Free Filing Options to Consider
Avoid paying expensive tax prep fees—these IRS-supported programs can help you file for free:
| Program | Who’s Eligible | Key Benefits |
|---|---|---|
| IRS Free File | Income ≤ $84,000 | Step-by-step software, includes state return options |
| Direct File | Simple returns in 25 states | Fast, user-friendly, with real-time IRS support |
| VITA/TCE | Income ≤ $67,000, seniors | In-person assistance, available in multiple languages |
| MilTax | Active-duty military & veterans | Includes federal and state returns, no income limits |
Using these services can save $150–$300, increasing the size of your refund.
What If Your Refund Is Smaller Than Expected?
If your refund doesn’t match your expectations:
- Check your IRS online account for notices about adjustments
- Review your withholding using the IRS Withholding Estimator
- Re-evaluate deductions you may have missed, such as HSA contributions or educator expenses
Final Thoughts
The 2025 tax season offers a rare opportunity for taxpayers to enjoy higher refunds, better credits, and streamlined filing options. With an average refund increase of over $300, this could be the most lucrative filing year in recent memory—but only if you know how to take advantage.
File early, double-check your documents, use trusted tools, and stay informed. These small steps can lead to big financial benefits come tax time.