The average tax refund each year, and how tax refunds work
The average tax refund so far this year is $2,939, just $70 higher than the average tax refund of $2,869 at this point a year ago, according to IRS data through the week ending May 9, 2025. That’s a 2.4 percent increase in the average refund amount.
Of course, that average could change in coming months, as people who didn’t file by the April 15 deadline submit their tax returns and claim their refunds. If about the same number of tax returns is filed in 2025 as were filed in 2024 — which may or may not end up being the case — then about 17 million more returns will be filed between now and the end of the year.
The average tax refund for all of 2024 was $3,138, based on IRS data through Dec. 27, 2024. Interestingly, that’s a full $269 higher than the average of $2,869 through early May 2024. It remains to be seen whether the average refund for 2025 similarly increases between now and the end of the year.
In all, about 105 million tax refunds were processed by the end of December 2024, totaling more than $329 billion.
A majority of taxpayers do end up with a tax refund: About two-thirds of returns (64 percent) filed in 2024 resulted in tax refunds, according to IRS data. But a big tax refund isn’t always the best financial result. Read on to find out the average tax refund by year, and why a small refund can be a good thing.
The average tax refund by year
Every year, everyone’s tax return, and tax refund, comes out a little different. This is a result of many factors, including tax laws, annual IRS inflation adjustments (such as for the standard deduction) and more. Here’s the average tax refund since 2015:
| Tax filing season | Average tax refund |
|---|---|
| 2015 | $2,797 |
| 2016 | $2,860 |
| 2017 | $2,895 |
| 2018 | $2,899 |
| 2019 | $2,869 |
| 2020 | $2,549 |
| 2021 | $2,815 |
| 2022 | $3,252 |
| 2023 | $3,167 |
| 2024 | $3,138 |
| 2025 | $2,939 (through May 9) |
| Source: IRS |
How tax refunds work
As a U.S. taxpayer, you must pay a portion of your earnings to the federal government to meet your tax obligations. Your employer is responsible for collecting taxes from every paycheck and paying the IRS on your behalf. If you’re self-employed, you’re responsible for paying estimated taxes.
How much you pay in federal taxes each paycheck depends on your earnings and how you fill out IRS Form W-4, which determines how much in taxes your employer withholds from your paycheck.
In addition, taxes for Social Security and Medicare are withheld from your paychecks. These are called FICA taxes, for Federal Insurance Contributions Act. The current rate for FICA taxes is 7.65 percent: 6.2 percent for Social Security (listed as OASDI taxes on your pay stub) and 1.45 percent for Medicare. You pay this rate, and your employer pays the same amount on your behalf.
If you’re self-employed, you need to pay both halves, for a total rate of 15.3 percent.
There is a wage ceiling for Social Security taxes, which means that Social Security taxes aren’t levied on income above that limit. For 2025, it’s $176,100, up from $168,600 in 2024. Gross income above that threshold is exempt from Social Security taxes.
When it’s time to file your taxes, you tally your income, claim any tax deductions and tax credits you might qualify for, and then see what your total tax obligation is for the year. If you had too much money withheld from your pay, the IRS owes you a refund. If too little was deducted from your pay, you owe the IRS the difference.
A small tax refund can be a good thing
It’s nice to see a tax refund show up in your bank account, especially if it’s a sizable one. But a big refund means that over the previous year, you gave the IRS more money than you had to. That means your paychecks were smaller than necessary. And when the IRS sends you a refund, it doesn’t come with interest.
On the other hand, if you owe the IRS at tax time, it means you’re not having enough taxes withheld from your pay throughout the year. While it may be nice to have that extra money every pay period, you’ll have to write a check to the IRS, and if you underpaid by a significant amount, you may owe penalties and interest.
Ideally, you want your tax bill to come out to $0 or very close to it. If you’re paying the IRS too little or too much throughout the year, adjust your W-4. If you’re not sure how much to have withheld, check out the IRS’s tax withholding estimator to figure out exactly how much to have withheld from each paycheck.
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