Average tax refunds so far in 2025 are up 7.5% but IRS still receiving fewer early returns

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The Internal Revenue Service is facing all sorts of much-publicized upheaval, including job losses, this tax season. But so far, early tax filers are seeing a steady stream of tax refunds hitting their bank accounts and mailboxes.

In Michigan, 153 probationary IRS employees represented by the union have lost their jobs so far, according to the National Treasury Employees Union. The job cuts hit during this year's tax season.

"Much of the IRS workforce is outside of the Washington, D.C., area, which means these layoffs are disrupting their local economies and hurting middle-income families in every state," Doreen Greenwald, president of the National Treasury Employees Union, said in a statement.

The union maintains that the layoffs are "arbitrary and unlawful, and NTEU will keep fighting until every wrongful termination is reversed."

Yet tax season keeps moving forward, as many IRS workers remain on the job and tax preparers continue to get information from clients and file 1040s.

What's the average tax refund so far?

The average federal income tax refund was $3,453 during this first four weeks through Feb. 21, according to the latest IRS data. That's up 7.5% from last year's tax season average of $3,213 through Feb. 23, 2024.

So far, more than $102.2 billion in federal income tax refunds have been issued, up 10% from the similar four-week period a year ago.

The IRS has issued more than 29.6 million refunds, up 2.3% from a year ago.

The IRS kicked off its tax season Jan. 27, the date when the agency began accepting and processing 2024 federal income tax returns.

More tax season tips: Getting a tax refund? Here are the best ways to use it.

IRS still sees a lag in the number of early returns

Yet, one set of numbers continues to mystify plenty of professionals. Many people who might have filed early in the season aren't doing so this year.

Is it because they fear they're going to owe more in taxes? Or are they hoping that some proposed tax cuts mentioned on the campaign trail by President Donald Trump will be retroactive to 2024? Most experts say that's unlikely to be the case. Or are they worried about a new 1099-K that showed up out of the blue?

The Internal Revenue Service has received 4.2% fewer early income tax returns so far this year through Feb. 21 than the agency received for a similar period last year. The IRS received 42.7 million federal income tax returns through Feb. 21.

The agency processed 3.8% fewer returns this year during the first four weeks of the tax season, according to the latest data published Friday.

Both do-it-yourselfers and tax professionals filed fewer early returns this year. The IRS data indicated a 5% drop in the number of e-filed returns from tax professionals in the first four weeks through Feb. 21.

The IRS showed a 3.3% decline in the number of e-filed returns received from those who self-prepared their returns through Feb. 21.

How 1099-K could be confusing some filers

Tax professionals point to a variety of factors that could be limiting the number of early returns in 2025. In some cases, people just don't have all the paperwork they need in hand or they need to dig up more records when it comes to how to handle some new rules.

A flood of 1099-K forms, for example, is hitting many people, including those with side hustle jobs or those who sold concert tickets, who never received this form in the past.

This year, taxpayers are receiving a 1099-K from payment card companies, payment apps, and online marketplaces when the amount of their business transactions during 2024 was more than $5,000.

Under the old standard, the 1099-K was only sent to those who had received more than $20,000 and had more than 200 transactions on third-party payment processing platforms in 2023 and earlier years.

Tax professionals say tax filers need to move cautiously when they receive a 1099-K because the amount reported on a tax form is not necessarily the full amount that's taxable.

If you bought concert tickets for a $500 purchase price and sold them for $900 to someone else, you have a profit that's taxable. It's not a $900 gain, though, as you paid something for those tickets. The gain on a sale of a personal item is taxable.

But if you sold a handbag for $200 online and paid $500 for it, the $200 received when you sold the bag at a loss isn't taxable. The loss on the sale of a personal item is not deductible. Don't expect a tax break there.

Refunds for earned income tax credits start flowing

The latest batch of data on the early tax season now does include some refunds for lower-to-moderate income households that struggle to make ends meet.

By law, the IRS can't issue refunds for returns that claim the earned income tax credit or the additional child tax credit before mid-February. The delay is designed to combat fraudulent returns that are filed to claim these credits.

Many early filers who claimed the earned income tax credit or the additional child tax credit were expected to get refunds by March 3, according to the IRS. That's if you filed your return online, opted to get your refund by direct deposit, and had no issues with your tax return.

The IRS "Where's My Refund?" tool is expected to show an updated status now for most early filers who claimed the earned income tax credit or the additional child tax credit.

While we still have weeks to go before the April 15 deadline hits for most tax filers, much of the tax season has been filled with headlines of job cuts and upheaval at the IRS. And yes, some are concerned that the tax season could face some disruptions when it comes to getting questions answered and returns processed.

Reportedly more than 6,000 of the 100,000 employees at the IRS across the country lost jobs, as the new Department of Government Efficiency reduces headcount across the federal government. That includes the 153 probationary workers at the IRS in Michigan, according to the National Treasury Employees Union.

The IRS had been hiring in recent years after the passage of the Inflation Reduction Act of 2022, which initially included nearly $80 billion in funding for the IRS over 10 years. Congress later rescinded approximately $21.6 billion in IRA funding for the IRS.

The IRS expanded its hiring to improve taxpayer services, modernized its technology and boosted enforcement efforts, including auditing more higher-income households. At one point in 2023, the IRS said it was targeting 1,600 millionaires who owed at least $250,000 each and collectively owe hundreds of millions of dollars, as part of an expanded push to make sure that wealthy taxpayers pay what they owe.

In April 2023, the IRS reported that more than 5,000 new customer service representatives had already been hired to process correspondence and answer the phone. The IRS also launched an effort two years ago to hire about 650 new employees to work in its Taxpayer Assistance Centers across the country.

In November 2023, the IRS held a two-day job fair at a banquet center in Southfield, Michigan. The goal was to fill full-time positions for revenue agents in Detroit. Agents typically plan and conduct examinations of individuals, businesses, tax-exempt and government entities to determine their federal tax bill. Agents can work directly with taxpayers, their representatives, certified public accountants and tax attorneys.

The salary range was fairly wide for those jobs — going from $41,000 to $108,000 a year. Salary offered depended on education, experience, and current salary, according to the IRS. Qualified applicants also might have received a recruitment incentive, which requires agreeing to one year of service.

Trump is reversing course at the IRS, however. On Jan. 23, for example, Trump released an executive order to halt hiring at the IRS to address "Americans’ fears of a supercharged Internal Revenue Service."

The order noted that "this includes curtailing the onboarding of tens of thousands of new IRS agents called for by Democrats in the so-called Inflation Reduction Act."

Some top leadership has changed, too.

IRS Commissioner Danny Werfel, who arrived at the IRS two years ago, announced on Jan. 17, three days before Inauguration Day, that he would resign.

Doug O’Donnell, who has been with the agency for 38 years in a variety of roles, took over as the IRS deputy commissioner. But he later announced that he would retire Feb. 28. IRS chief operating officer Melanie Krause was named acting commissioner.

Trump has nominated former U.S. Rep Billy Long, R-Missouri, to be the next IRS commissioner.

Right now, it's hard to say how changes at the IRS might interrupt the flow of refunds or the processing of income tax returns in the weeks ahead.

If the IRS accepts an e-filed return as of March 3, tax filers in general could expect to receive a refund as of March 14 by direct deposit if no issues arise, according to estimates by CPA Practice Advisor, a resource for tax professionals. The publication notes that filing during peak season, which runs from late March through April 15, can result in slightly longer waits.

Contact personal finance columnist Susan Tompor: stompor@freepress.com. Follow her on X @tompor.