US tax refunds are up 11% this year: What taxpayers need to know about bigger IRS payouts

As of April 3, nearly 100 million households had filed their returns, with the average refund standing at $3,462, more than 10% above last year’s early-filer average of $3,116, according to IRS filing data.

Why are US tax refunds bigger this year?

The jump reflects the sweeping Republican tax law, formally the One Big Beautiful Bill Act, passed by Congress in July 2025. Because the law took effect midyear, many companies continued withholding too much tax from employee paychecks under the old formulas. That excess is now being returned to workers as larger refunds.

The IRS has so far sent out more than $241 billion in refunds this season, a 14% increase over the $211 billion issued by the same point last year, even though the total number of returns filed (just under 100 million) is slightly below last year’s pace.

The share of filers getting money back is also higher. According to a Washington Post analysis of IRS data, just over 70% of people whose returns had been processed by April 3 this year received a refund, compared with 67% of similarly early filers last year.

What changed in the tax law

The OBBBA raised the standard deduction and introduced several new deductions targeted at specific groups:

• Child tax credit: Raised from a maximum of $2,000 to $2,200 per child.
• New deductions for 2025 through 2028: Workers can now deduct qualified tip income, overtime pay, and interest on certain US-made auto loans. The tip and overtime deductions together can be worth up to $6,000 for a married couple, according to the Washington Post.
• Senior deduction: Qualifying senior citizens get a new $6,000 deduction, which can cut their overall tax bill by as much as $1,320, per Bipartisan Policy Center analysis.
• Standard deduction: The increase is worth up to $555 in tax savings for the highest earners, though the vast majority of filers save much less, according to the Bipartisan Policy Center.
• SALT cap: The cap on the state and local tax deduction has been lifted from $10,000 to $40,000 for households earning up to $500,000 a year. For a qualifying married couple, this alone could mean close to $10,000 in tax savings, according to the Washington Post.
• The overtime deduction has proven especially popular, with more than 23 million households claiming it as of early April. The auto-loan interest deduction, by contrast, has been claimed by just over a million households, well below Trump administration projections.

Why next year’s refund may be smaller

Before this year, the average refund had barely moved: $3,167 in 2025, $3,138 in 2024, $3,167 in 2023, and $3,252 in 2022, per IRS data cited by the Washington Post.

Refunds are likely to shrink again next year. From the 2026 tax year onwards, employer withholding tables will reflect the new, lower tax rates, meaning workers will keep more of their paycheck through the year rather than receive it as a lump sum at tax time.

Disclaimer: This article is for general information only. Tax outcomes vary based on individual circumstances. Readers should consult a qualified tax professional for advice specific to their situation.