Why Millions of Americans Could See Bigger IRS Tax Refunds This Year
Federal tax season is officially underway and for millions of Americans, the number on that refund check could be noticeably higher than last year. The US Treasury is now projecting that average federal tax refunds may increase by about one thousand dollars per household and that has caught the attention of taxpayers across the country and well beyond.
This is not about a sudden surge in income or a last-minute giveaway. What’s happening is a combination of tax law changes and how paychecks were handled throughout last year. Congress approved several new and expanded tax breaks that apply to the most recent tax year. But most workers never updated their paycheck withholding to reflect those changes. So instead of seeing that money spread out during the year, it’s now showing up all at once as a refund.
One of the biggest drivers is a larger standard deduction. This is the deduction used by the majority of filers and even a modest increase directly lowers taxable income. That alone can push refunds higher for millions of households, including middle-income families who may not itemize deductions at all.
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Another major factor is the expanded deduction for state and local taxes, often called the SALT deduction. For taxpayers in higher-tax states, the cap on how much they can deduct has jumped significantly. That change makes itemizing worthwhile for more people and can dramatically reduce the amount of federal tax they owe.
There is also a new deduction aimed at older Americans. Eligible seniors aged 65 and up may qualify for an additional deduction on top of existing ones, potentially reducing their tax bill by thousands of dollars. Advocacy groups estimate that tens of millions of seniors could benefit from this change alone.
Why does this matter right now? For many households, a larger refund can offer breathing room. It can help pay down debt, cover rising living costs, or rebuild savings after years of economic pressure. But experts also warn that a big refund is often a sign that too much tax was withheld during the year. In simple terms, it means the government held onto money that could have been in your paycheck each month.
Looking ahead, taxpayers are being encouraged to review their withholding so they are not overpaying again this year. Small adjustments can improve monthly cash flow without risking a surprise tax bill next filing season.
As returns begin moving through the system, this refund season could feel very different for millions of Americans. Stay with us as we continue tracking how these tax changes are affecting households and keep watching for the latest updates that matter to your money.
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