IRS Issues Larger Refunds Amid Fewer Tax Filers for 2025

Washington, D.C. — The Internal Revenue Service (IRS) reported this week that the 2025 tax season resulted in slightly larger refunds for American taxpayers, despite a decrease in the total number of refunds issued. The agency revealed that as of October 17, it distributed over 102 million refunds, with an average refund amounting to $3,052, a 1.6% increase from the previous year.

The IRS processed 163.5 million returns for the 2025 tax year, up 1.3% from 2024. However, the agency issued approximately 1 million fewer refunds than in the previous season. The total amount refunded in 2025 reached $311.65 billion, reflecting a 0.6% increase over 2024.

Experts suggest this trend of ‘fewer-but-bigger’ refunds is likely due to the expiration of pandemic-era credits and improvements in withholding accuracy, leading many taxpayers to overpay and receive larger refunds. About 93% of refunds were processed via direct deposit, following the IRS’s recent push to phase out paper checks.

Despite these positive figures, the IRS faced challenges during the filing season. Recent reports underscore that staffing issues, including a significant turnover rate, could impact the agency’s ability to manage the increasing workload. The IRS lost nearly 17-19% of staff in certain departments in recent years, raising concerns about potential processing delays and fraud detection.

The government shutdown in October also placed strain on the IRS, leading to furloughs for thousands of employees and stalling tax operations. However, the tax agency managed to keep pace with its responsibilities and overall processing times improved compared to recent years, thanks in part to the resources from the Inflation Reduction Act.

Overall, the IRS’s handling of the 2025 filing season was viewed as efficient, even amidst financial and operational turmoil. As families prepare for the 2026 season, they will need to navigate new tax rules, including increases in standard deductions and modifications to child tax credits.