Average tax refunds soared higher this year thanks to President Trump’s bevy of new tax deductions – and it’s possible the number was actually dragged down by delayed filings and confusion around who was eligible for the new exemptions, experts told The Post.
More than 53 million taxpayers took advantage of new deductions in President Trump’s “One Big Beautiful Bill Act,” including tax-free tips and overtime and new deductions for seniors.
Filers took home $3,462 on average, an 11.1% or roughly $350 jump from last year – but it wasn’t quite as high as the $1,000 rise that Trump had estimated.
Alex Durante, senior economist at the Tax Foundation, a tax policy nonprofit, said it could be an issue of “taxpayer salience.”
“Maybe they’re not aware of all the new provisions or not necessarily claiming everything that’s available to them,” Durante told The Post.
Wealthier individuals tend to file tax extensions, so they could move the average tax refund higher once their filings are actually processed – especially since it’s an average figure, not a median, he noted.
Lisa Greene-Lewis, a certified public accountant for TurboTax, said she was surprised by how many people waited until the last minute to file their taxes this year – especially since larger returns were expected.
As of April 3, the IRS had received 99,802,00 income tax returns – about 1.6% fewer than the same time last year, meaning an estimated 20 million people were on track to miss the filing deadline.
A possible explanation is that filers were confused by Trump’s new tax deductions, causing delays.
Greene-Lewis said TurboTax was flooded with questions about the overtime, senior, vehicle loan and tip deductions – so much so that it extended its hours until midnight on Tax Day to help filers.
A TurboTax survey published in February showed that 44% of Americans were unsure of how new tax provisions applied to their income.
Another side effect of the deductions is a possible increase in scams and noncompliance, according to Nathan Goldman, a member of the American Accounting Association and a prof at North Carolina State University.
Goldman said while there is always a high risk of scams around tax season, he noticed even more scammers on the loose this year – likely looking to take advantage of Americans perplexed by the new deductions.
He said sketchy figures will promise larger refunds and charge very high fees, and it will ultimately be the taxpayer who is left on the hook for any bogus filings if they are audited.
There will also likely be a lot more noncompliance this year among both filers and employers who don’t know how to handle the new exemptions, Goldman said.
Large companies with their own accounting teams might be well-prepared, but a small mom-and-pop restaurant could struggle to accurately adjust withholdings for its tipped and overtime workers, he explained.
The nature of the new tax deductions also means some states will see a much larger impact on their average tax refunds.
An analysis from Upgraded Points found Florida had the highest average refunds at $4,433, with Texas, Wyoming, Nevada and Louisiana rounding out the top five states with the biggest payouts.
States with big tourism industries and casinos, like Nevada, often employ a lot of tipped workers, which could explain why their returns are higher, Durante said.
And states without state income taxes, like Florida, tend to have a larger number of retirees who could benefit from the larger senior deduction this year, he added.
The impact of the larger tax refunds might also seem muted as Americans face higher costs amid the Iran war and tariffs.
The Tax Foundation estimated that once everything is tabulated, the average individual refund will be $748 higher this year – but that higher gas prices amid the war will cost households an additional $740 to $1,000.
Americans are expected to see their tax refunds decrease next year as the IRS issues new guidance and employers adjust their withholdings to match the new tax bill.
