Tax refund season has delivered a feel-good headline for millions of Americans filing their 2025 returns this spring.
The IRS reports that the average refund has climbed to $3,521 as of March 27, roughly $350 more than the same period last year, according to IRS filing season statistics.
On paper, that looks like progress, especially for the 46% of filers who say they are counting on a refund this year to cover bills, debt, or savings goals, according to a LendingTree survey.
But before you celebrate, look closer at what the numbers are not telling you.
The gap between what was promised and what has landed in bank accounts reveals something far less encouraging.
The $1,000 refund boost that never showed up
The White House projected in January that the average taxpayer could see refunds rise by $1,000 or more this season, citing early research from investment bankPiper Sandler.
Instead of that $1,000 windfall, the year-over-year increase has hovered around $350 across multiple weeks of filing data, according to IRS filing season statistics.
That is a meaningful shortfall for households that budgeted based on early projections, and it raises a fair question about whether the new tax provisions were delivered as broadly as advertised.
The average refund peaked at $3,742 during the week ending February 20 and has declined steadily since, a pattern consistent with prior filing seasons, the Bipartisan Policy Center confirmed in its analysis of IRS historical data.
Trump’s new tax deductions are reaching fewer filers than the headlines suggest
The One Big Beautiful Bill Act introduced several new deductions for 2025, including breaks for tip income, overtime earnings, senior citizens, and auto loan interest.
Nearly 50% of filed returns included at least one of President Donald Trump’s signature deductions, with the overtime break claimed on roughly 20 million filings, Treasury Secretary Scott Bessent said during a late-March Fox & Friends interview.
The tip income deduction has been claimed on about 4.6 million returns so far, providing direct relief for service-industry workers who previously owed taxes on every dollar of gratuity income, Bessent confirmed. Those are real numbers, but they also obscure who these provisions miss entirely, and that group is far larger than most filers realize.
Nearly 90% of filers will not benefit from the expanded SALT deduction
One of the most talked-about changes in the new tax law was the increase in the state and local tax deduction cap from $10,000 to $40,000 for tax year 2025.
That sounds like a generous expansion, but you must itemize your deductions to claim it, and during tax year 2022, roughly 90% of filers chose the standard deduction instead, based on the latest available IRS Statistics of Income data.
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The standard deduction for 2025 rose to $15,750 for single filers and $31,500 for married couples filing jointly under the One Big Beautiful Bill Act, which makes itemizing even less attractive for most households, according to Tax Foundation analysis.
If you live in a high-cost state like New York, New Jersey, or California, you may benefit from the higher SALT cap, but if your total itemized deductions fall below the new standard deduction threshold, you gain nothing from this provision.
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A bigger refund is not the same as paying less in taxes
Your refund is not a government bonus or a reward for filing your taxes correctly and on time. Your refund is your own money coming back to you because you overpaid throughout the year through paycheck withholding, and that distinction matters more than most filers appreciate.
The IRS did not adjust federal withholding tables when the new deductions took effect for tax year 2025, which means your employer continued to withhold the same amount from each paycheck.
The difference between what you owed and what was withheld simply grew larger, and that expanding gap is the refund you are now receiving in your bank account.
Related: How Taxes are Reshaping Where Americans Live and Work
You could have had that money in your paycheck every two weeks instead of waiting until spring for a lump-sum deposit from the Treasury. For filers living paycheck to paycheck, that forced savings mechanism might feel helpful, but you earned zero interest on the money you loaned the federal government throughout the entire calendar year.
If you want to adjust your withholding so more of your earnings stay in each paycheck going forward, you can update your Form W-4 directly with your employer. The IRS offers a free Tax Withholding Estimator on its website that walks you through exactly how much to adjust based on your specific financial situation.
What the refund decline pattern means for last-minute filers
The average refund has dropped from its late-February peak of $3,742 down to $3,521 as of March 27, and experts expect the number to fall further as the April 15 deadline approaches. “It is less likely we are going to see a major change” before Tax Day, William McBride, chief economist at the Tax Foundation, told CNBC.
Later filers tend to have more complex returns, including self-employment income, partnership distributions, and investment gains, which can reduce or eliminate refunds entirely.
The Bipartisan Policy Center’s analysis of the prior four filing seasons shows a consistent pattern where average refunds peak in late February and then gradually decline through the April 15 deadline.
How millions of filers plan to spend their refunds this year
For the majority of Americans who do receive a refund, the money is not going toward vacations or splurge purchases this filing season.
“It seems that that tip and overtime earners were incentivized to file early, potentially in anticipation of larger refunds,” said Andrew Lautz, director of tax policy for the Bipartisan Policy Center.
Nearly one-quarter of filers expecting a refund plan to use it to pay down credit card debt, and an equal share plan to put the money directly into savings, a CNBC and SurveyMonkey Quarterly Money Survey released in April found after polling 3,494 adults.
Where your refund dollars are headed this spring
- 23% of filers expecting a refund plan to use it to pay down credit card debt, reflecting persistent consumer debt levels across all income brackets.
- 23% plan to save the payment directly, building emergency reserves or funding short-term financial goals for their households this year.
- 46% of all filers say they are relying on their refund this year, up from 36% in 2023, pointing to growing household financial pressure nationwide.
- The Child Tax Credit maximum rose to $2,200 per child under the new law, providing additional support for eligible families with qualifying dependents.
Those figures point to a broader story about household financial stress, because when nearly half of all filers say they depend on their tax refund, its size is not just a number on a chart.
3 steps to take before next filing season
If your refund disappointed you this year, or if you want more control over your cash flow going forward, there are practical moves you can make before the next tax year closes.
Step 1: Review your W-4 withholding with your employer
Use the IRS Tax Withholding Estimator to determine whether your current withholding matches your expected 2026 liability, and submit an updated Form W-4 if the numbers are off.
Step 2: Check whether itemizing saves you more than the standard deduction
If your combined state and local taxes, mortgage interest, and charitable contributions exceed the new standard deduction threshold, itemizing could unlock hundreds or thousands in additional savings for your household.
Step 3: Track every eligible deduction throughout the year
If you earn tip income, overtime pay, or qualify for the senior deduction, keep detailed records now instead of scrambling at filing time next spring, because documentation gaps cost filers money every single year.
Related: IRS flags creators who skip quarterly tax payments