The IRS has confirmed that the average federal tax refund has climbed to $3,742 as of late February, a 10.6% increase compared to the same point in 2025, when the figure stood at $3,382. The jump reflects both the natural rhythm of the filing season and the early effects of sweeping tax legislation signed by President Donald Trump last summer.
The gains are particularly visible among filers claiming new deductions introduced through the One Big Beautiful Bill Act, which Trump signed into law in July 2025. More than four in ten of the approximately 55 million returns filed so far have included at least one of the new tax breaks, and those filers are seeing refunds that are, on average, $775 larger than comparable returns from a year ago.
New Deductions Are Driving the Gains
The legislation created several targeted breaks aimed at specific groups of workers and older Americans. Service industry employees earning under $150,000 annually can now deduct up to $25,000 in qualified tip income, while workers receiving overtime pay may deduct a portion of those earnings. Separately, Americans aged 65 and older are eligible for an additional $6,000 deduction, available in full to single filers earning below $75,000 and married couples below $150,000.
According to IRS CEO Frank Bisignano, who testified before the House Ways and Means Committee this week, the overtime deduction has been the most widely used of the new breaks, while the senior bonus has generated the biggest bump in individual refund size. Bisignano noted it is “dominantly” households with adjusted gross incomes below $100,000 that are claiming these deductions, and he suggested that by the time tax season closes, average refunds for those filers could reach $1,000.
The Broader Picture Remains More Measured
Despite the headline figures, the overall gains across all filers are somewhat more modest. IRS data shows the average refund has grown by roughly $360 compared to the same stage last year, a meaningful but not transformational increase for most households. The Tax Foundation, an independent nonpartisan think tank, had projected refund increases in the range of $300 to $1,000, a range that appears largely consistent with what is now emerging from the data.
The timing of certain credits has also contributed to the upward movement in averages. Federal law prevents the IRS from issuing refunds to taxpayers claiming the Earned Income Tax Credit or the Additional Child Tax Credit before mid-February. As those payments, affecting an estimated 24 million taxpayers, began flowing in recent weeks, they pulled the overall average higher.
According to the IRS, taxpayers who file electronically and opt for direct deposit should expect their refunds within approximately 21 days, provided there are no issues with their returns. The filing deadline remains April 15, with the current data reflecting roughly 51.5 million of the 164 million individual returns expected this season. Whether the final averages hold, or soften further as more straightforward returns come in, will become clearer in the weeks ahead.
