Tax Refunds Slow as IRS Processes Fewer Returns This Season

DETROIT, Mich. — The 2025 tax season is facing a sluggish start, with the Internal Revenue Service (IRS) processing 7.6% fewer returns as of February 7, compared to the same period last year. This decline raises concerns about potential delays for millions of taxpayers seeking their refunds.

According to the latest IRS data, approximately 23.5 million returns have been processed since the season began, significantly lower than previous years. The average tax refund issued so far stands at $2,065, an increase of 18.6% from 2024, but many taxpayers are apprehensive about filing their returns early.

Factors contributing to this slowdown include misleading online tax advice, the influx of 1099-K forms, political instability, and challenges due to recent federal disaster declarations. Mark Steber, chief tax officer at Jackson Hewitt Tax Service, noted, “Bad information is floating on social media suggesting that taxpayers wait, thinking the IRS may go away.”

Taxpayers utilizing the earned income tax credit or additional child tax credit should prepare for possible delays, with the IRS estimating refunds by March 3 for those who e-filed their returns with direct deposit. However, many filers are now opting to wait in light of the new reporting requirements associated with gig economy income.

The changes mean more taxpayers require a 1099-K form if they earn over $5,000 from platforms like PayPal or StubHub, leading to increased caution among filers as they seek to better understand their reporting obligations.

Despite fewer returns being filed, IRS leadership expects the numbers to stabilize as the April 15 filing deadline draws near. “Filing season numbers are expected to even out in future weeks,” an IRS spokesperson stated.

This year’s filing season began earlier than 2025, with e-filing available since January 27. The IRS has suggested that this earlier start may have caused confusion, as filers waited for documentation such as W-2 forms before submitting. Nevertheless, Steber emphasized that the obligation to file remains unchanged regardless of political discussions surrounding potential tax reforms.

Amid all the confusion, Matt Hetherwick, chief program officer for the Accounting Aid Society, indicated an uptick in demand for tax preparations, saying, “Our appointment scheduling is seeing an increase in demand when compared to the same time last year. Tax work seems to be on track at this point.”

Looking ahead, tax professionals are urging clients to proceed as normal despite the rhetoric surrounding the IRS under the current administration, stressing that filing promptly decreases the risk of incurring penalties or interest on owed taxes.

As the filing season progresses, the IRS cautions filers to remain informed through trusted financial advisors rather than dubious online sources. “Taxpayers must understand their filing responsibilities or risk repercussions,” stated Christina Wease, director of the Alvin L. Storrs Low-Income Taxpayer Clinic at Michigan State University.