Tax Refunds Are Up, but Most People Aren’t Seeing the $1,000 Boost They Were Promised—Here’s Why
Wondering why your 2025 tax refund is smaller than expected? Experts explain the OBBBA tax changes and share smart strategies to make up for the gap
Key Takeaways
- Tax refunds are up 11.1 percent this year—an increase of about $350 on average.
- Smaller refunds may stem from new OBBBA deductions that weren't automatically applied.
- Experts advise putting refunds toward high-interest debt or in a high-yield savings account.
Back in January, President Donald Trump and his administration promised Americans that their tax refunds would increase by $1,000 or more this year. And while refunds are up 11.1 percent from the previous year, according to the Internal Revenue Service (IRS), the average dollar amount has only increased by about $350. Why is that? And what can you do if your tax refund is less than you were expecting? We look into it all below.
What to know about tax refunds this year
Last year, President Trump signed into law the One Big Beautiful Bill Act (OBBBA) and The Working Families Tax Cut Act. These moves were supposed to increase the average tax refund; eliminate tax on tips, overtime and Social Security; and give farmers a break on their taxes.
“The Working Families Tax Cuts are about opening the books for the American people,” Treasury Secretary Scott Bessent said in a statement at the time. “We want Americans to see exactly how President Trump’s policies will strengthen small businesses, allow workers to keep more of their hard-earned money and spur economic growth.”
Some Americans actually benefited from the breaks, with Nicole Mendoza, a waitress at Cracker Barrel, telling The New York Times, “I got back every penny.”
Ashley Norwood, a bartender in South Carolina, echoed a similar statement, telling the outlet, “It was really great to have that extra money and say, ‘We can pay off what we do owe and do something nice for ourselves and the family.’”
Others feel differently, saying they didn’t get as much money as they originally hoped—a fact that heavily impacts the rest of their 2026 financial planning. Heather Brown, a scheduling manager for a home-improvement company, for example, got an $1,800 refund this year, which is much less than the $4,500 she received last year.
“Now we’re going to have to figure out where to tighten up in other areas so we can get that money a different way,” she told The New York Times.
Matt Dangel, a machinist, normally gets about $6,000 back from the IRS, and while that remained true this year, his check only increased by $120, not the promised $1,000.
“I was certainly expecting there to be more than $120 worth,” he told the outlet.
Why are the refunds smaller?
So, why exactly are the refunds smaller anyway? According to Elisabella Ricca, a personal finance and consumer analyst at TopCashback.com, it’s all because of the OBBBA.
“Recent tax changes relating to the OBBBA can be confusing or intimidating for those less familiar with tax rules. There are several new deductions, including ones for seniors, tips and overtime,” Ricca explains.”If they neglect to use them and expect them to be automatically applied, they may be disappointed by a smaller refund.”
Courtney Alev, a consumer financial advocate at Intuit Credit Karma, adds, “If your tax refund is smaller than expected, it’s usually due to changes in your income, tax credits or how much was withheld throughout the year. The first step is to review your return closely to understand what shifted.”
What can you do if your refund is smaller than expected?
Alev’s advice for those whose refund is smaller than expected? “Think about how to make that money work harder for you, whether that’s paying down high-interest credit card debt or putting it into a high-yield savings account so it can grow over time.”
“If your plans are suddenly impacted by your refund, focus on covering essentials first and revisit your budget to stay on track,” she continues. “To get ahead next year, keep in mind that your refund isn’t extra money, it’s money that you’ve overpaid, so you may want to consider adjusting withholding to better align and meet your financial goals.”
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