During this year’s tax season, initial reports suggest that Americans might be receiving one-third less in tax refund payments compared to last year’s figures.
However, before citizens rush to conclusions about the decline in tax returns this year, the IRS indicates that tax data typically balances out as more people submit their filings. Americans are therefore encouraged to hold off on their judgments until the tax season concludes on April 15th.
So far, 33 million returns have been processed, which is approximately 5% less than the number of returns submitted around the same time last year.
What’s Causing the Delays in Tax Filing This Year?
This year’s tax season began two days earlier than last year’s. While it was expected that a greater number of citizens would have already filed their taxes by this point, that expectation has not materialized.
The exact reasons behind the delays in filing remain unclear. There are speculations that many individuals are holding off in anticipation of certain proposals from the new Trump Administration that could be relevant this tax season. One proposal discussed during Trump’s campaign was a tax break on tips, which might have resulted in American workers postponing their filings until this benefit could be considered. However, it is quite unlikely that this proposed tax relief will take effect for the current tax year.
The IRS suggests that the delay could also stem from small business owners taking longer to receive necessary tax forms. There might have been a greater availability of paperwork at the start of last year’s tax season, considering that the deadline for issuing W-2 Forms is January 31st.
Additionally, gig economy workers completing their 1099-K Forms may also be experiencing challenges in understanding how to complete these forms, contributing to the slow pace of tax filing. More individuals are receiving 1099-K Forms this year, as previously, only gig workers who earned over $20,000 and had more than 20 gigs needed to file these tax forms.
What’s Causing the Confusion This Year?
This tax season has been marked by numerous changes, leading to some disruption in IRS operations, seemingly influenced by Elon Musk’s cost-cutting Department of Government Efficiency (DOGE) initiative.
Additionally, a tweet from Musk in February spurred rumors that the free online tax preparation and filing program known as Direct File had been discontinued. However, residents in 25 states can still access Direct File.
The ongoing confusion in Washington may be causing taxpayers to delay their filings even further.
When Can Taxpayers Expect Refunds?
Taxpayers who file promptly can expect to receive their refunds more quickly. For this reason, tax experts strongly advise American citizens to file their tax returns as early as possible. There’s also an added incentive to file sooner due to nationwide IRS office closures and the potential for job losses among IRS employees during the tax season.
Refunds are typically processed within 21 days after electronic filing. Tax professionals recommend electronic filing, as paper submissions are processed manually, which can take longer.
Who Might See Decreased Tax Refunds?
As of February 14, 2025, the average tax refund was approximately $2,169, reflecting a 32% decrease compared to last year’s average refund of $3,207. This $1,000 drop has raised concerns among individual taxpayers regarding a potential reduction in their refund amounts this year.
Nonetheless, tax experts reassure individuals that they are not automatically going to receive $1,000 less in refunds this year. As more tax returns are filed, the average refund figure is likely to change. Typically, lower- to middle-income taxpayers file first, and their simpler tax situations are resolved early on. Following them, those with more complex filings and higher incomes will submit their returns. Some individuals may wait until the last minute and file by the tax deadline on April 15. Therefore, the current tax data will likely be adjusted once additional returns are filed.
