Average Tax Refund: How Much Will You Get Back?
Discover average tax refunds by year and learn why a smaller refund may benefit your finances.
Understanding Average Tax Refunds and How They Work
Every year, millions of taxpayers eagerly anticipate receiving their tax refunds. The average tax refund represents the amount the IRS returns to taxpayers who have overpaid their taxes throughout the year. In 2025, the average tax refund so far stands at $2,939, according to IRS data through May 9, representing a modest 2.4 percent increase compared to the same period in 2024. Understanding tax refunds, how they are calculated, and what they mean for your finances can help you make more informed decisions about your tax strategy and financial planning.
Average Tax Refund by Year: A Historical Overview
Tax refunds fluctuate annually due to various factors, including changes in tax laws, IRS inflation adjustments for deductions and credits, and shifts in taxpayer behavior. Examining historical refund data provides insight into how economic conditions and policy changes influence the amount Americans receive back from the IRS.
| Tax Filing Year | Average Tax Refund |
|---|---|
| 2015 | $2,797 |
| 2016 | $2,860 |
| 2017 | $2,895 |
| 2018 | $2,899 |
| 2019 | $2,869 |
| 2020 | $2,549 |
| 2021 | $2,815 |
| 2022 | $3,252 |
| 2023 | $3,167 |
| 2024 | $3,138 |
| 2025 (through May 9) | $2,939 |
Notably, 2020 saw the lowest average refund in this period at $2,549, likely due to pandemic-related economic disruptions and tax policy changes. The years 2022 and 2023 experienced higher average refunds, with 2022 reaching $3,252—the highest in this decade-long overview. The slight decline in 2025 to $2,939 suggests that refund amounts may normalize as more taxpayers file their returns throughout the year.
How Many Taxpayers Receive Refunds?
The vast majority of American taxpayers end up with refunds. According to IRS data, approximately 64 percent of all tax returns filed in 2024 resulted in tax refunds. This means that roughly two-thirds of taxpayers receive money back from the IRS. In 2024 alone, the IRS processed approximately 105 million tax refunds, totaling more than $329 billion in refunds paid to American taxpayers. As more returns are filed beyond the April 15 deadline, the total number of refunds and their average amount can shift significantly throughout the year.
Current 2025 Tax Refund Data
The average tax refund for 2025 currently stands at $2,939 through May 9, according to the most recent IRS data. This represents an increase of $70 (or 2.4 percent) compared to the average refund at this same point in 2024, which was $2,869. However, it is important to recognize that this figure represents only early-filers and may change significantly as millions of additional returns are processed throughout the remainder of the year. IRS data suggests that approximately 17 million more tax returns could be filed between May and the end of 2024, potentially altering the final average refund amount. For comparison, the 2024 final average refund was $3,138—a full $269 higher than the May average that year—demonstrating how substantial changes can occur as late filers submit their returns.
Why a Small Tax Refund Might Be Better for Your Finances
While receiving a large tax refund can feel exciting and rewarding, financial experts often caution that a substantial refund is not necessarily ideal. Here’s why: a large refund means you gave the IRS more money than necessary throughout the previous year. In other words, your employer withheld too much in taxes from your paychecks, effectively giving the federal government an interest-free loan with your own money.
When you receive a large refund, it represents money you could have had in your paychecks each pay period. This money could have been used to pay bills, invest for retirement, build an emergency fund, or pay down debt. Additionally, when the IRS returns this money to you, it does so without paying any interest on the amount, meaning you lose the opportunity to earn returns on those funds throughout the year.
A smaller refund, by contrast, suggests that your withholding is more accurately aligned with your actual tax liability. This means more of your earnings are available to you throughout the year, giving you greater control over your finances and the opportunity to put that money to work immediately through savings, investments, or debt repayment.
Tax Withholding and Social Security Considerations
Your tax refund is directly influenced by how much your employer withholds from your paycheck. Understanding the relationship between withholding and refunds can help you optimize your tax situation. Additionally, it’s important to be aware of Social Security tax thresholds, which affect the amount of taxes withheld from your wages.
If you are self-employed, you are responsible for paying both the employee and employer portions of Social Security taxes, totaling 15.3 percent of your net self-employment income. Importantly, there is a wage ceiling for Social Security taxes, meaning that Social Security taxes are not levied on income above a certain threshold. For 2025, this ceiling is set at $176,100, an increase from $168,600 in 2024. Income above this threshold is exempt from Social Security taxes, though it remains subject to Medicare taxes and federal income tax withholding.
How to Optimize Your Tax Withholding
To ensure you receive a more appropriate refund—or ideally, owe very little or get a small refund—you should review your W-4 form with your employer. The W-4 determines how much tax is withheld from your paychecks. If you consistently receive large refunds, you may want to increase your allowances or adjustments on your W-4 to reduce withholding. Conversely, if you consistently owe taxes, you should decrease your allowances to increase withholding.
Major life changes such as marriage, divorce, the birth of children, significant changes in income, or taking on a second job should prompt a W-4 review. The IRS provides a tax withholding calculator on its website to help you determine the appropriate withholding for your situation.
What Happens to Refunds Throughout the Year
As demonstrated by 2024 data, the average refund amount can change substantially as the tax year progresses. Early in the tax season (January and February), the average refund is typically lower because early filers tend to be more organized and may have their withholding better aligned with their actual tax liability. However, as the April 15 deadline approaches and more taxpayers file their returns, the average refund often increases. This is because many people who file closer to the deadline or after the deadline may have more complex tax situations, additional income sources, or different circumstances that result in larger refunds or refund claims.
Key Takeaways About Tax Refunds
Understanding your tax refund is an important component of overall financial planning. Here are the essential points to remember:
- The average tax refund in 2025 (through May 9) is $2,939, up $70 from the same period in 2024
- Approximately 64 percent of tax returns filed in 2024 resulted in refunds
- The largest refunds in recent years occurred in 2022 ($3,252) and 2023 ($3,167)
- A large refund means you overpaid taxes throughout the year and gave the IRS an interest-free loan
- A smaller refund may indicate better withholding alignment and allows you more control over your money during the year
- Self-employed individuals pay 15.3 percent in combined Social Security taxes
- The 2025 Social Security wage ceiling is $176,100
- Final average refunds for the year are typically higher than mid-year averages due to late filers
Frequently Asked Questions About Tax Refunds
Q: Is it better to get a large tax refund or a small one?
A: A small refund is generally preferable because it means your tax withholding is properly aligned with your actual tax liability. A large refund indicates you overpaid taxes throughout the year and gave the IRS an interest-free loan. By adjusting your W-4, you can have more money available in each paycheck to invest, save, or pay down debt.
Q: Why does the average tax refund change throughout the year?
A: The average tax refund changes as more taxpayers file their returns. Early filers often have smaller refunds, while late filers and those with complex tax situations may have larger refunds, pulling the average upward as the year progresses.
Q: What factors affect the size of my tax refund?
A: Your refund depends on several factors: how much your employer withheld from your paychecks, your total income, filing status, number of dependents, tax credits you qualify for, deductions you claim, and any major life changes during the year.
Q: How can I adjust my tax withholding?
A: You can adjust your withholding by completing a new W-4 form and submitting it to your employer’s human resources department. The IRS website offers a withholding calculator to help determine the appropriate settings for your situation.
Q: Does the Social Security wage ceiling affect my refund?
A: The Social Security wage ceiling affects how much Social Security tax is withheld from your paycheck, which in turn influences your overall tax withholding and potential refund. In 2025, the ceiling is $176,100.
References
- The average tax refund each year, and how tax refunds work — Bankrate. 2025-05-09. https://www.bankrate.com/taxes/average-tax-refund/
- Tax refund schedule: How long it takes to get your tax refund — Bankrate. 2025-05-28. https://www.bankrate.com/taxes/how-long-does-it-take-to-get-tax-refund/
- Internal Revenue Service (IRS) Official Data — U.S. Department of Treasury. 2025. https://www.irs.gov/
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