Tax refunds are coming in bigger this year, and you may have to thank inflation for the boost.
The IRS reported that the average refund amount was $2,069 based on 11.7 million tax returns processed through Jan. 31. That’s up 34% from $1,543 during the same period last year when the agency processed 13.9 million returns. Overall, the IRS has delivered over $3.2 million in tax refunds versus $2.6 million last year.
It’s still early in the tax season, meaning refund amounts still have time to climb higher.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more – straight to your e-mail.
Profit and prosper with the best of expert advice – straight to your e-mail.
Tax experts this year hinted that refunds could come in slightly larger due to inflation-related changes to the standard deduction and tax brackets for 2024. There’s also an extra standard deduction benefit for people over 65.
These changes impact your taxable income and generally translate to a bigger refund. That’s if your filing status and tax credits are the same as last year.
Here are three reasons why your refund may be better this year.
Tax refunds average amount
Though the average amount for IRS tax refunds will change as more returns are processed, here are some key reasons why refunds are so far about $526 more than this time last year.
1. Larger standard deduction
Most taxpayers benefit from the standard deduction, and there’s good news this year. The 2024 standard deduction amounts for returns you’re filing now, in early 2025, are slightly larger.
That means you’ll get a broader chance to lower your tax liability and potentially get a larger tax refund. For single taxpayers and married individuals filing separately, the standard deduction rises to $14,600 for 2024, an increase of $730 from the previous year.
For couples who file jointly, the standard deduction is $29,200. As for heads of households, their deduction is $21,900 for the 2024 tax year.
If you are at least 65 or blind, you can claim an additional standard deduction benefit worth $1,950 for 2024. The extra deduction amount is doubled if you and your spouse meet that criteria.
Planning ahead? The IRS announced the 2025 standard deduction, and it’s the largest it has ever been.
2. Tax brackets adjusted for inflation
The IRS adjusts tax brackets each year to reflect upticks in the cost of living, to prevent what is sometimes referred to as “bracket creep.”
However, if a taxpayer’s income increases more than the inflation rate, they could move into a higher bracket. In some cases, that can impact the amount of tax credits and deductions they are eligible to claim.
For instance, popular credits like the child tax credit phase out the higher your income level is.
The federal income tax rates haven’t changed for the 2024 tax year: 10%, 12%, 22%, 24%, 32%, 35%, and 37%.
For more information see our guide: 2024 and 2025 Federal Tax Brackets and Income Tax Rates
3. Earned Income Tax Credit
The Earned Income Tax Credit (EITC) is an often-overlooked refundable tax break available for workers with low and moderate incomes, with or without children.
As Kiplinger reported, the amount you get depends on your income, filing status, and the number of qualifying children in your household. Most importantly, due to 2024 inflation adjustments, the EITC credit amounts and income thresholds are slightly larger than a year ago.
- No qualifying children: $632
- 1 qualifying child: $4,213
- 2 qualifying children: $6,960
- 3 or more qualifying children: $7,830
Some good news: the EITC income and credit thresholds increased for 2025. That could lead to a bigger refund next year as well.
Check your refund status for updates
Tax season is underway, and the IRS has already received over 13.1 million tax returns through Jan. 31. The tax agency expects more than 140 million individual tax returns to be filed by the April 15 deadline.
If you’ve electronically filed your tax return, the ‘Where’s My Refund’ tool can show you the status of your tax refund as early as 24 hours after the IRS receives your return. Those that file a paper return can check their refund status four weeks after mailing a return.
There’s one exception. The IRS isn’t legally allowed to issue EITC or Additional Child Tax Credit (ACTC) refunds before mid-February, which may keep some refunds on hold for early filers.
If you electronically filed your tax return and expect an EITC or ACTC refund, you can check your refund status by Feb. 22. The first refunds should be delivered by March 3, according to the IRS.
Remember, your tax refund amount may be slightly bigger this year if your income levels and tax brackets haven’t changed significantly. So stay tuned for more updates as the tax season continues.
For more information and live updates, follow our tax team on Filing Taxes 2025: Live Updates, Tax Tips, and Strategies from Kiplinger.