Here's Why the Average IRS Refund for Tax Returns Filed in 2025 Is 32% Lower Than Last Year

The latest data from the US Internal Revenue Service (IRS) revealed that the average tax refund for those who have already filed their returns for the 2024 tax year was £1,725 as of 14th February 2025. This is a 32% drop from £2,551 compared to the same day last year. By Valentine's Day, the IRS had received almost 33 million individual tax returns.

Tax season officially began on 27th January. That's when the IRS started processing returns for the tax year 2024. For most filers, taxes for 2024 returns are due on 15th April 2025.

Despite the lower tax refunds, the IRS stated that 'historically, filing season numbers even out as more tax returns come in.'

Child Tax and Earned Income Tax Credits Take Additional Time

The latest average refund figures could be lower, given that the data doesn't include refunds linked to earned income tax credits or additional child tax credits because these refunds are generally issued after mid-February. These credits could turn tax returns into five-figure amounts, considerably increasing the average rebate.

Since these tax credits take longer to process due to additional identity checks under the federal Protecting Americans from Tax Hikes Act (PATH), the IRS doesn't want taxpayers to rely on any specific date for a refund to pay bills or make large purchases. However, the agency expects refunds for these tax credits to be available to filers in their bank accounts by 3rd March. Note that federal holidays and weekends could lead to delays.

A recent Intuit Credit Karma survey showed that many taxpayers rely on yearly tax refunds to make ends meet. Around 45% attribute their worrisome financial situation to high living costs due to sticky inflation. At the same time, US taxpayers also use their tax refunds to pay down debt or grow their emergency funds.

However, the IRS stated that those who don't claim earned income or child tax credits and file their federal returns electronically using the direct deposit option can expect refunds in their bank accounts within 21 days.

Key Tax Changes To Be Aware Of

Although much of the tax filing process is the same as last year, filers should be aware of some key changes.

The standard deduction for taxpayers filing in 2025 jumped by £318 to £11,932. For couples filing jointly, the amount increases to £23,865. The IRS adjusts these values annually based on inflation trends, which picked up again after cooling down in the latter half of 2024. The IRS also hiked the maximum Earned Income Tax Credit amount to £6,400 from £6,228.

Meanwhile, due to the expansion of the Direct File program, more Americans can now file their taxes for free. The IRS expects to receive over 140 million individual returns before the April deadline.

US Taxpayers can track their refunds using the 'Where's My Refund' tool on the IRS website. Filers can input your Social Security Number (SSN) or Individual Taxpayer ID Number (ITIN), select the appropriate tax year and filing status, and then enter the exact whole dollar refund amount on your return to check the refund status.