Wondering about your tax refund? It might be bigger than you expect this year

Federal income tax refunds are starting to flow from the Internal Revenue Service, and you may be getting back more than you expected, a new analysis suggests. 

An Oxford Economics report released Monday shows total tax refunds closely match those of the past five years. But the total dollars returned to taxpayers could be among the highest in recent years. 

Why? Thanks to the IRS’s sizable increases in the annual tax bracket adjustments, you and many other Americans may have withheld too much in 2024. 

“Last year, annual tax-code adjustments were more generous than usual as wage growth slowed,” Bernard Yaros, Lead U.S. Economist at Oxford Economics, wrote in the report.

Where's my refund? How much money paid in IRS refunds this year

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So those of us who received little or no increases in our pay last year might have a little extra in our tax refunds. And those who didn't withhold enough might need to pay a little less than you expected.

For lower-income Americans, the money can be a significant bonus on top of any refunds from earned income or additional child tax credits. In 2022, many more tax filers could take advantage of tax credits from the American Rescue Plan, which pushed refunds to their highest levels in years.

How average IRS refunds have changed since 2020

The average refund in 2025 has been $2,169. Oxford Economics expects the average to jump in the coming days (as it has in previous years), but they did not estimate how high it might rise.

It’s probably not a surprise to retailers that Oxford Economics titled its report “ ‘Tis the tax-refund season,” considering the bounce it can provide to their bottom lines. Refund season is no Black Friday, but some retailers see strong sales as Americans receive their checks.

 “Historically, February is the most important month for refunds," Yaros wrote. "A larger refund issuance relative to prior years correlates with stronger retail sales during that month.”

How Americans spend their IRS tax refund money

The larger tax refunds tend to offer the biggest benefit for low- to moderate-income tax filers. That's led to the biggest bumps in used-car sales as well as purchases at discount stores and warehouse clubs.

Not all Americans' refunds end up in cash registers. Yaros points out that credit card delinquency rates also fall shortly after refunds arrive as people pay off bills and pay down debt.