2025 Tax Refunds Up 6.3% — Extra Cash to Help You Fight Inflation

Alex O'Connell
Published Mar 18, 2025

2025 Tax Refunds Up 6.3% — Extra Cash to Help You Fight Inflation

Good news for taxpayers this year — the IRS confirms that 2025 tax refunds are averaging $3,382, a 6.3% increase compared to last year.


With many families still feeling the impact of rising costs and inflation, this extra cash comes at the perfect time, helping Americans cover daily expenses like groceries, utility bills, and housing.
 

Why Are Refunds Bigger in 2025?

The main reason for larger refunds is inflation adjustments made to:

  • Standard deductions
  • Tax brackets

These changes reduced the tax burden for millions, allowing more income to be taxed at lower rates or even be tax-free.


Key Adjustments that Boosted Refunds

   

Refund Growth Timeline (Inflation-Adjusted Increases)

 
  • Week of February 14, 2025
    • Average Refund: $2,169
    • Change: -32.4% (Before EITC/ACTC credits)
  • Week of February 21, 2025
    • Average Refund: $3,453
    • Change: +7.5%
  • Week of February 28, 2025
    • Average Refund: $3,382
    • Change: +6.3%

How This Help with Inflation?

With prices still high on essentials like gas, food, and utilities, these increased tax refunds provide much-needed financial breathing room:

  • Pay down rising energy bills
  • Cover grocery expenses
  • Help offset housing costs or rent increases
  • Rebuild emergency savings

Not sure what financial aid is available to you? Get the details here!

Many taxpayers are seeing higher refunds due to automatic paycheck withholdings not adjusting to new tax brackets — another unintentional but welcome boost.

Therefore, it is recommended that you review your W-4 annually.

Important Reminders

 
  • The filing deadline is April 15, 2025
  • Extensions are available until October but payments are due in April
  • Taxpayers in disaster zones may have longer deadlines

While inflation continues to strain household budgets, these larger tax refunds act as temporary relief, giving Americans extra cash to stay afloat. For millions, this refund is an essential tool to fight back against the rising cost of living.

For updates or to track your refund: Visit IRS.gov

Previous article: 
$6,500 Housing Bonus to Help Families Struggling with Inflation

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