You’ve probably heard the headlines. The White House called this the largest tax refund season in U.S. history and projected the average refund would rise by $1,000 or more. So if your refund felt underwhelming, you’re not imagining it.
The truth is more complicated than the headlines. Yes, refunds are technically up, but for most people, the bump has been a lot smaller than promised. Here’s what’s actually happening, and what it might mean for you.
The Numbers Are Bigger, But Not By $1,000
According to IRS data, the average federal tax refund as of early April sat at $3,462, up about 11% from the same point last year. That sounds significant until you do the math: it’s roughly $350 more than last year, not the $1,000 the White House projected.
A survey by the Bipartisan Policy Center found that 62% of respondents said the new tax changes either harmed them or made no difference. Even among Republicans, only 35% said the changes favored them.
Tom O’Saben, director of tax content at the National Association of Tax Professionals, put it plainly: people are “quietly, perhaps, happy but not to the extent where I would call it significant.”
So what happened to the big refund season?
Why the Benefits Aren’t Evenly Distributed
The main driver of larger refunds this year is the One Big Beautiful Bill Act. It introduced new deductions for tip income, overtime pay, auto loan interest, and an enhanced deduction for seniors. It also raised the SALT cap — the federal deduction for state and local taxes — from $10,000 to $40,000.
That last one is the key. The SALT increase primarily benefits higher-income homeowners in high-tax states. According to Tax Foundation analysis, higher-income taxpayers are significantly more likely to report larger refunds this year. Lower and middle-income filers, not so much.
There’s also another wrinkle. Some of the tax law’s savings aren’t showing up as bigger refunds at all. They’re showing up as smaller bills for people who owe. If you filed and owed less than expected, that’s the same financial relief. It just doesn’t feel as tangible as a direct deposit.
What’s Eating the Gains
Even filers who did get a bigger refund this year aren’t exactly celebrating. Gas prices above $4 per gallon, driven up by ongoing conflict with Iran, have offset a meaningful chunk of the extra cash for many households. Economists at Oxford Economics noted that higher fuel costs are absorbing a significant portion of the refund bump for average families.
The math worked, the checks came, and then a tank of gas happened.
What This Means If Your Refund Was Lower Than Expected
If you got less than you expected, it’s worth asking why before you move on to next year.
A few things worth checking:
- Did you claim the new deductions available for 2025, including tips, overtime, the senior deduction, and auto loan interest? If your return was done by software without a professional review, these may have been missed or miscalculated.
- Did your withholding keep up with your income? A pay increase, a new job, or a change in filing status without a corresponding W-4 update can quietly shrink your refund year over year.
- If you itemize, did the SALT increase change your calculation? For homeowners in states with significant property taxes, this is worth revisiting.
The 2025 tax season resource page has a breakdown of key changes worth reviewing. And if you’re not sure whether your return captured everything you were owed, an amended return is always an option. You have three years from the original filing date to submit one.
Still Haven’t Filed? There’s Still Time
The April 15 deadline has passed, but extension filers have until October to submit their returns. If you filed an extension, reviewing this year’s important tax dates and deadlines is a good place to start.
And if you haven’t filed at all, even if you owe, filing late is almost always better than not filing. The penalties for not filing are significantly steeper than the penalties for not paying.
Not sure if your return left money on the table? Schedule a free consultation with a Boxelder accountant and we’ll take a look.
