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Will 2025 bring you a bigger tax refund? All things being equal, it might. Your tax refund may be bigger this year due to inflation-related changes to the standard deductions and tax brackets for 2024. These adjustments could translate to a bigger tax refund compared to 2023 if your income, withholding, filing status and tax credits stay the same. Of course, these factors can easily change from year to year, as can your salary, side income, investment income, eligibility for tax credits, qualifying deductions and more.
What does this mean for your tax refund 2025? Read on to learn more about what might cause your refund to be bigger or smaller in the 2025 tax season.
Why Would Your Refund Be Bigger in 2025?
If your income, withholding, filing status and tax credits are identical in 2023 and 2024, you might see a slightly bigger refund when you file your 2024 taxes in 2025. That's because the IRS adjusts the standard deduction and tax brackets each year for inflation, reducing your taxable income and the tax rates you pay on it.
That said, these adjustments for 2024 are relatively minor, with none of the sweeping changes to tax policy seen during and after the COVID-19 pandemic. Setting aside any major changes to your tax situation, this is how the standard deduction and new tax brackets might affect your refund.
Larger Standard Deduction
The IRS adjusts standard deductions each year for inflation. For 2024, the standard deductions increased roughly 5.4% over 2023's standard deductions. The standard deduction is an amount you can deduct automatically from your taxable income without having to report or document individual itemized deductions.
Here's how standard deductions compare for 2023 and 2024.
| Standard Deductions, 2023 vs. 2024 | |||
|---|---|---|---|
| Filing Status | 2023 | 2024 | Change |
| Single or married filing separately | $13,850 | $14,600 | +$750 |
| Head of household | $20,800 | $21,900 | +$1,100 |
| Married filing jointly or qualifying surviving spouse | $27,700 | $29,200 | +$1,500 |
Source: IRS
For quick reference, if you're married filing jointly and you're in the 22% tax bracket, your refund would increase by about $330 based on an additional $1,500 standard deduction.
Adjusted Tax Brackets
The IRS also adjusted 2024 tax brackets for inflation. Although marginal tax rates have stayed the same, the income brackets assigned to each marginal tax rate have shifted. As a result, taxpayers with the same taxable income in 2023 and 2024 might pay slightly less in taxes for 2024.
Here's a rough sketch of how new tax brackets might affect your tax bill if you're single with $110,000 in income. In this example, $110,000 translates to $96,150 in taxable income in 2023 after subtracting the standard deduction of $13,850, and $95,400 in 2024 after subtracting the 2024 standard deduction of $14,600.
| 2023 vs. 2024 Taxes Single taxpayer making $110,000, standard deduction | ||||
|---|---|---|---|---|
| 2023 Brackets | 2023 Tax | 2024 Brackets | 2024 Tax | |
| 10% | $11,000 | $1,100 | $11,600 | $1,160 |
| 12% | $11,001 - $44,725 | $4,047 | $11,601 - $47,150 | $4,266 |
| 22% | $44,726 - $95,375 | $11,143 | $47,151 - $95,400 | $10,615 |
| 24% | $95,376 - $96,150 | $186 | Not applicable | Not applicable |
| Total | $16,923 | $16,041 |
When you apply 2024 tax brackets to $110,000 in income, minus a $14,600 standard deduction, the total tax bill adds up to $16,041, compared to $16,923 in 2023. The new 2024 standard deduction and tax brackets save you roughly $882 on your federal taxes in this example.
Earned Income Tax Credit
Though 2024 was not a year for massive changes to commonly claimed tax credits, income thresholds and credit amounts for the earned income tax credit were adjusted for 2024. As a result, some taxpayers who didn't qualify in 2023 may in 2024.
| 2024 Earned Income Tax Credit | |||
|---|---|---|---|
| Number of Children Claimed | Single, Head of Household or Widowed | Married Filing Jointly | Maximum Credit |
| Zero | $18,591 | $25,511 | $632 |
| One | $49,084 | $56,004 | $4,213 |
| Two | $55,768 | $62,688 | $6,960 |
| Three or more | $59,899 | $66,819 | $7,830 |
Source: IRS
Other Reasons Your Refund May Be Larger or Smaller
Any changes to your income and withholding can affect the size of your refund. And in truth, it's probably more likely that your income and tax situation will change from year to year than it is for these factors to remain exactly the same.
Which changes are likely to impact your tax bill? Here's an abbreviated list of possible tax-related developments you may have experienced in 2024.
- You got a new job, promotion or raise. Making more money could push a portion of your income into a new tax bracket or disqualify you from certain tax credits. On the other hand, a pay cut could lower your tax bill.
- You changed your filing status. Whether you're newly married, newly single or a new parent, changes to your filing status affect your standard deduction—and therefore how much tax you owe.
- You're newly eligible for tax credits. You adopted a child. You started paying for child care so you can work. Your kid started college. Each of these milestones could make you newly eligible for a tax credit—namely, the adoption tax credit, the child and dependent care credit and the American opportunity tax credit.
- You're no longer eligible for tax credits. The same principle also works in reverse: If your child turned 17 this year, for example, you may no longer qualify for the child tax credit.
- You started a business or side gig. You're required to pay taxes on any net income you made running your own business, doing gig work, selling items online (for a profit) or freelancing. If profits were up, you may owe more than expected. If you overestimated your business income, you may get some money back.
- You changed your withholding or estimated taxes. Broadly speaking, your refund is the difference between the tax you owe and the money you paid in throughout the year through paycheck withholding and estimated taxes. If you adjusted to your withholding or moved your estimated tax payments up or down, your refund might be affected.
- You sold your home. Selling your home for more than you paid for it generally results in a taxable capital gain.
- You bought a home. If you itemize deductions on your tax return, you can deduct home mortgage interest on the first $750,000 of your home loan. That could be a little over $48,000 in mortgage interest deductions if you have a $750,000 loan at 6.5%.
- You invested in stocks or cryptocurrency. If you tried your hand at investing in cryptocurrency, stocks or any number of investments, the capital gains you made are taxable. Interest or dividends you earned are also taxable.
- You changed your retirement. Whether you upped your 401(k) contribution, opened an individual retirement account (IRA), converted a traditional IRA to a Roth or began taking retirement distributions, changes to your retirement can affect your taxes.
How to Maximize Your Tax Refund
Though there are many ways to try to bring down your tax bill—and pump up your refund—these are some of the most common (and thus most likely to apply). Here are five quick ways to maximize your refund.
- File on time. Avoid IRS penalties for late filing by making sure you meet the tax filing deadline: April 15 or October 15 if you file for an automatic extension.
- Claim tax credits. See whether you qualify for IRS tax credits that can lower your tax bill dollar-for-dollar.
- Try itemizing your deductions. Most taxpayers take the standard deduction. However, if you have large deductions, such as the home mortgage interest deduction or deductible medical expenses, itemizing can be worth your while. The only way to know for sure is to add up your potential deductions and see whether they beat the standard deduction for your filing status.
- Check your filing status. Speaking of filing status, your tax bill changes depending on whether you file as a single taxpayer, head of household or married couple filing jointly or separately. If you've recently undergone a life change, or if more than one status may apply to you (for instance, married filing jointly or separately), try using tax software to estimate your tax liability both ways.
- Make a retirement contribution. You can lower your taxable income by making a contribution to your 401(k) retirement plan at work, a traditional IRA or a health savings account. Each of these types of accounts has annual contribution limits, so check to make sure you don't over-contribute.
How to Prepare for Tax Season
You can't claim a tax refund until you file your tax return, so preparation is key. Here are four basic steps to help you get ready and file.
1. Get Your Records Together
Start gathering the documents you'll need to prepare your taxes: W-2 forms from your employer, 1099-INTs reporting interest, 1099-NEC forms for non-employee compensation and 1099-K forms for online business transactions you did through third-party payment networks (such as Venmo).
Go online to collect the forms you can. Also watch the mail: 1099s often arrive around the end of January.
2. Get Help at IRS.gov
The IRS website offers a wealth of information and interactive help for taxpayers. Among the most useful:
- Search the IRS site. You can search by topic for informative web pages, fillable tax forms, detailed tax publications and interactive tax assistants that guide you through common tax issues. It's not light reading, but it is information straight from the source.
- Use IRS Direct File. The IRS's free tax-filing software allows you to prepare and file your federal tax return. Following a successful pilot launch in 2024, IRS Direct File rolls out to 24 states in 2025. Free File tax preparation software is also available for free to taxpayers who meet income requirements.
- Set up an online account to schedule payments and apply for payment plans. You can also use your online account to request tax transcripts and view key data from your most recent tax return.
- Get a six-digit identity protection PIN. An identity protection PIN prevents other people from filing a tax return with the IRS using your identity, which helps combat a major method of tax fraud.
3. Meet With a Tax Advisor
Sometimes expert support and guidance is needed. Although a tax advisor can help with even the simplest of tax returns, you may find working with a tax pro especially useful if you own your own business, itemize your deductions, make extra income doing a side gig or need to report income from investments.
4. Track Your Refund
Once your taxes are filed, track your refund status using the IRS' Where's My Refund? online tool. Your refund status is typically available 24 hours after you e-file a current-year return; three or four days after you e-file a prior-year return; or four weeks after you file a paper return.
The Bottom Line
With so many factors in play, the only way to know for sure what your refund will be is to do your tax return. When you're finished, get your refund ASAP by filing electronically, choosing direct deposit and making sure your tax return is accurate and complete. If you accidentally enter the wrong information or claim a deduction you aren't entitled to, you may trigger an IRS inquiry that will slow your refund down.
The fastest and safest way to receive your tax refund is through IRS direct deposit to a bank account. If you don't have a checking account, consider the Experian Smart Money™ Digital Checking Account & Debit Card, which can help you build credit without debt by linking to Experian Boost®ø. Start building credit with eligible bill payments after three months of payments. See terms at experian.com/legal.