Short Description:
Get ready for bigger refunds! New 2025 tax breaks, like a larger standard deduction and senior deduction, mean the average taxpayer could see an extra $1,000 back from the IRS.
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2 minutes, 15 seconds
Main Article
The 2025 tax filing season is officially open, and for millions of Americans, it brings a welcome surprise: significantly larger tax refunds. The U.S. Treasury projects that the average refund will increase by about $1,000 this year. This windfall is primarily due to a series of new and expanded tax provisions passed by Congress that took effect for the 2025 tax year, combined with the fact that most people didn’t adjust their paycheck withholding to account for them.
Two expanded breaks and one new credit are the biggest contributors to these heftier refunds. First, the standard deduction saw a substantial increase—up $750 for single filers and $1,500 for married couples filing jointly—directly lowering taxable income for most. Second, the cap on the state and local tax (SALT) deduction jumped from $10,000 to $40,000, offering major relief for residents of high-tax states who itemize. Finally, a new senior deduction provides an additional $6,000 ($12,000 for couples) for eligible taxpayers aged 65 and older, a move expected to benefit over 30 million people.
While a large refund can feel like a bonus, financial experts note it represents an interest-free loan to the government. If you’d prefer to have that money in your pocket throughout the year to save or pay down debt, you can adjust your withholding by submitting a new W-4 form to your employer. However, it’s wise to proceed cautiously; the IRS withholding estimator hasn’t yet been fully updated for all 2025 changes, and a drastic reduction could lead to a surprise tax bill next year. Consulting a tax professional can help you find the right balance to optimize your cash flow without risking underpayment.
Short Summary
This tax season, average refunds are projected to rise by $1,000 thanks to key 2025 tax provisions: a larger standard deduction, an expanded SALT deduction, and a new senior deduction. Because most filers didn’t update their withholding, these benefits are arriving as a lump-sum refund. Taxpayers can adjust their W-4s to increase take-home pay but should do so carefully to avoid underpayment penalties.
