Key Takeaways
- The average federal refund was up about 11% in the 2026 filing season (roughly $3,397), mainly due to new OBBB deductions for tips, overtime, auto loan interest, and seniors 65+.
- Because the IRS didn't update 2025 withholding tables for these new deductions, many eligible filers got the benefit as a lump-sum refund instead of through bigger paychecks all year.
- The Child Tax Credit is now permanently $2,200 per child (up to $1,700 refundable), higher than the $1,000 drop previously scheduled for 2026.
- Common non-OBBB reasons for a lower refund still apply: Treasury offsets for debts like child support, withholding set too low across multiple jobs, and no longer itemizing due to a higher standard deduction.
- For 2026 (filed in 2027), withholding tables will build OBBB's benefits into paychecks - so refunds may normalize lower next season even though your tax situation hasn't gotten worse.
- Getting a smaller refund with the same or higher income usually just means you withheld more accurately - it's not automatically a bad outcome.
If your refund feels smaller than you expected, you’re not imagining it being out of step with the news — average refunds are actually up this filing season, which can make an unchanged or lower refund of your own feel especially confusing.
Nationally, the average federal refund reached $3,397 as of early April 2026, up about 11.2% from $3,055 the year before, largely thanks to new deductions under the One Big Beautiful Bill (OBBB). But averages don’t apply to everyone, and there are several common, specific reasons your own refund could still come in lower than you expected.
See the current-year refund schedule if you’re also tracking when your payment will actually arrive, and subscribe or follow us for updates as refund trends and tax rules change.
Why Refunds Went Up for Many Filers This Year
The One Big Beautiful Bill (OBBB), passed in 2025, introduced several new deductions — for tips, overtime pay, auto loan interest, and a new $6,000 deduction for seniors 65 and older. The IRS estimated the average tip deduction alone was worth more than $7,000, the overtime deduction averaged over $3,100, and the senior deduction averaged above $7,500.
Here’s the twist: the IRS did not update 2025 paycheck withholding tables to reflect these new deductions. That means most eligible taxpayers kept having taxes withheld all year as if these breaks didn’t exist, then got the benefit back in one lump sum when they filed — instead of seeing it spread across slightly bigger paychecks throughout 2025.
If your own refund didn’t go up the way the national average did, it’s likely because you don’t qualify for these specific new deductions (see no tax on tips, no tax on overtime, and the $6,000 senior deduction for the eligibility rules) — not because something went wrong with your return.
Tax Refund Offset Reduction
One of the most common reasons a refund comes in lower than your software estimated is that the federal government has “offset,” or deducted, money from your refund to cover debts owed to other agencies.
The Treasury’s Bureau of the Fiscal Service (BFS) manages the Treasury Offset Program (TOP) and can reduce your refund to cover:
- Past-due child support
- Federal agency non-tax debts
- State income tax obligations
- Unemployment compensation debts owed to a state
You’ll get a formal notice from BFS explaining the offset and which agency requested it, with contact details for follow-up. The IRS itself can’t help with non-IRS offsets — you’ll need to contact the Treasury Offset Program or the requesting agency directly. See more on how offsets get applied to your refund and what transaction code 898 on your transcript means.
If you filed jointly and believe you’re not responsible for your spouse’s debt, you can request your portion of the refund back using Form 8379, the injured spouse allocation — see the IRS’s injured spouse guidance for how to file it.
Child Tax Credit and Other Credit Changes
The Child Tax Credit (CTC) is now $2,200 per qualifying child, permanently locked in under OBBB — up from the $2,000 it had been, and higher than the drop to $1,000 that was previously scheduled to happen automatically at the end of 2025. Up to $1,700 per child of that credit is refundable as the Additional Child Tax Credit (ACTC), and both figures are now indexed to inflation going forward. See the Child Tax Credit page for full income phase-out details.
If your refund is lower than a prior year specifically because of credits, it’s usually because your income, number of dependents, or filing status changed — not because the credit itself shrank. Compare this year’s numbers directly against what you claimed last year before assuming something’s wrong.
Standard Deduction Changes
The standard deduction keeps rising with inflation. For 2025, it’s $15,750 (single/married filing separately), $23,625 (head of household), and $31,500 (married filing jointly). For 2026, it rises again to $16,100, $24,150, and $32,200 respectively.
Filers 65 or older or blind get an additional standard deduction on top of that ($1,600 per qualifying condition for 2025, $1,650 for 2026) — and that’s separate from OBBB’s new $6,000 senior deduction described above, which stacks on top rather than replacing it.
A higher standard deduction generally means smaller itemized deductions matter less for most filers, which can shrink a refund if you used to itemize (e.g., mortgage interest, charitable giving) and no longer benefit from doing so.
Subscribe or follow us to get notified as refund trends and IRS guidance are updated through the season.
Smaller Refund Scenarios Due to Paycheck Withholding
A lot of smaller-than-expected refunds come down to how your W-4 withholding was set, not any change in tax law. Here are a few real reader scenarios that come up often:
Scenario 1 (multiple jobs): Mary is single and normally gets a solid refund. This year she worked two jobs — $15,000 at one, $14,800 at the other — and her refund dropped to $400.
Why: Each employer withheld taxes as if that job were her only income for the year, so neither withheld enough for her actual combined $29,800 income. To fix this going forward, she needs to update her W-4 — specifically using the multiple-jobs worksheet or the IRS’s online withholding estimator — so both employers withhold based on her true total income.
Scenario 2 (withholding set too low): A single filer with no dependents earned about $14,000 and only had $590 withheld, ending up with a refund of just $95.
Why: On the current W-4, this usually means Step 2 (multiple jobs/spouse works) or Step 4 (extra withholding) wasn’t filled in the way that matches the filer’s real tax liability — the form no longer uses the old “allowances” system, so if you want more withheld, the fix is entering an extra dollar amount in Step 4(c) of your W-4, not “claiming fewer allowances.”
Scenario 3 (higher income, smaller refund): A single filer with no dependents made $30,000 (versus $22,000 two years earlier) and saw their refund drop from around $2,000 to $47, despite earning more.
Why: Higher income pushed more of their pay into a higher marginal tax bracket, and withholding wasn’t adjusted to match. They took home more money throughout the year — which is arguably better than a large refund, since a big refund just means you gave the IRS an interest-free loan on your own money all year.
Refund Advance Loan Fees
If you used a refund advance or refund-transfer product through your tax software or preparer, part of your refund may have gone to pay processing or transfer fees before the rest was released to you. These fees and loan amounts vary by provider and change often, so check your specific provider’s current fee disclosure (Jackson Hewitt, H&R Block, TurboTax, Liberty Tax, and TaxAct all offer some version of this) rather than relying on a number that may be outdated by the time you read this.
Historical Note: Expired Pandemic-Era Provisions
A few older reasons for low refunds no longer apply. The temporary $10,200 unemployment income tax exclusion only applied to the 2020 tax year and was never extended. Expanded, fully-refundable Child Tax Credit and Dependent Care Credit amounts from 2021 also reverted years ago. If you’re comparing your refund to one from that era, keep in mind those were one-time boosts, not a baseline to expect again.
Looking Ahead: 2027 Outlook
Here’s what I’m watching for filers preparing 2026 tax returns (filed in early 2027): unlike 2025, the IRS is updating withholding tables for 2026 to build OBBB’s tips, overtime, auto loan interest, and senior deductions directly into paychecks throughout the year.
That’s good news for your take-home pay, but it also means many filers who got an unusually large refund this season (because 2025 withholding didn’t reflect the new deductions) may see a smaller refund next season for the exact same tax situation — simply because they already received the benefit gradually instead of in one lump sum. A smaller 2027 refund compared to 2026 isn’t necessarily a red flag; check your total tax liability, not just the refund number, before assuming something changed for the worse.
I make just under 48k per year. I paid over 4k in federal taxes. I get a lousy $400 back? Why do single people get shafted.
Well – getting a small refund is a good thing as means you withheld the right amount. Getting a large refund instead isn’t great. It’s just your money being returned to you
Biden didn’t role back Trump’s tax credits. It would require a majority vote in the House and Senate, this wasn’t even brought to the floor for a vote!
So Politicians can get millions of dollars in PPP loan money they took forgiven 100 percent free money! But the ridiculously small amount they gave working families to survive a pandemic they caused! The so called stimulus checks are now costing us higher taxes so they can get the money back! But the millions in PPP paid to millionaires all is forgiven and those are our tax dollars as well! How is this just ok with everyone! Sorry but it’s more than time to make some serious changes to our so called political system! The insider trading, Bribes never mind the tax dollars that seem to be just disappearing at an alarming rate that no one can account for how is this even possible! We have given 100 billion dollars to Ukraine while families in our own country are left to struggle year after year. How are we not beyond feed up with the corrupt state we call government!
We are 56 and 62 both working and together make under 45k we are eligible for food stamps! Never paid taxes at end of year except 2029 and 2021. How can we be on Foodstsmps AND have to pay more taxes at end of year??!!!
This is all Trump’s doing.
The tax break was only temporary for us . But permanent for the rich. Now that window ended and this is the reality of his tax changes while the rich are getting richer .
No that is the Biden tax credit. Trump has been out of office for two tax years. Stop blaming everything on Trump. He left in January of 2020, the last years he is responsible for is 2019. That was three years ago. It is the Biden tax credit.
Trump’s tax laws dont simply go out of effect once he’s out of office. Or is that something you don’t understand? Before he instated his laws I was getting back huge returns, after, I owe thousands. That’s YOUR guy’s tax laws in action. screw the poor and middle class and benefit the rich.
Biden stopped everything Trump put into effect the day he took office. Do you not remember all the media taking pictures of him signing away everything Trump did (which is why you got more money back in taxes when Trump was in office!) It makes me crazy that you Biden supporters don’t get it! Open your eyes and stop playing the Trump card!
Seriously, Biden changed all the tax laws Trump put in placed the first week he was in office.
I’ve been doing my own taxes for 12 years and this year my refund is extremely low. I thought I was entering something wrong, but after reading these comments I don’t feel alone. I made more per hour in 2021 than I ever have in the past, but I only saw half of what I earned due to federal and state taxes. I double-checked my tax withholdings to make sure I only claimed myself. I thought I would get a lot back. Turns out, this country is just backwards… This is ridiculous!
The country is not “backwards.” The phrase, Nothing is ever Free, has never been so true as of right now. All those “Stimulus” or ” Free Money” everyone was getting and spending it on junk, welp, that was your tax credit. It stated in the article, “credit against your future tax return,” so if you received $1400 early in the year, welp you probably received all if not more of your actual tax credit. So technically if you were originally going to get back $1200 but received $1400 earlier in the year, well you own $200 back to the government. Remember nothing is ever free, the government will NEVER give you free money.
While I agree that “Nothing is ever free” Why are hard working people paying for the unemployed to sit at home and make babies? My income is higher this year because no one wants to work and therefore I have to work more hours and much harder… Not only that but inflation is driving the prices of food and fuel off the roof. I work hard labor for an hour to earn enough change for a loaf of bread and and a gallon of gas to get me into the next day so I can slave away again and again for a company that makes a mil in a single weekend. We are rewarding people for being lazy. I could do it too; file for unemployment… but I just wasn’t raised that way. I’m not a pig like you. Wallow in your sh*t till you drown. When the government stops supporting you you’ll drawn in a bath of your own sh*t and piss and the working class will try and support you, but dead weight like yourself is like carrying a pig on your back.
Then why do they say that the land of the free?? Like u said nothings free.. Maybe we the people need take over like they did British people. F*** your taxes then double taxing so you live an retire like kings..
PERFECT ! THAT IS EXACTLY THE TRUTH.
They just did and thanks to Biden, those who never had college debt now do to pay off the $300B college debt bailout.
Funny how you guys don’t bat an eye when the Governemnt shells out billions to bail out corporations, but when they do something to help the public you get all up in arms about it. I think you guys need to get your priorities straight.
I got less than 10% of what refund I normally get back. No changes. Actually made 30% less money. Partner has same issue getting significantly less back… always do taxes the same way. Must be combination of stimulus payments and the student loan interest I didn’t pay (actually brought down my loan’s principle by 3-4k just through normal monthly payments)….BUT- doesn’t really explain my partner’s low taxes. No student loans with him.
My refund this year is the lowest I have EVER recieved 3500 dollars lower too be exact, even with CTC & EIC didn’t even get back what I paid in!!! THIS THE SH*T WE ALL HAVE TO LOOK FORWARD TOO. THE AMERICAN GOVERMENT WANTS TOO KEEP ITS CITIZENS IN POVERTY!!!
Why would you overpay taxes just to receive a large refund ??
The Govt earns interest on that 3500.00 .
Change WT – & just pay what is due based on your W-4. Why people are programmed to think large refunds are a bonus – is puzzling !!
I completely agree! It’s pathetic!
That is the biggest Full of crap answer that I ever heard. Trumps problem and now our fault for voting for him.
The IRS is trying to reclaim the stimulus.
We are getting a much lower amount because the feds are trying to reclaim stimulus money.
Whitney, you are part of the problem if you truly believe what you wrote.
Democrats wanted big stimulus checks-fought about it.
How is that Trumps doing?
Get real.
Loving those high gas prices to go with the low tax return…
Biden hard at work.
Got news for you. Trump also wanted the the stimulus checks that’s why they were issued. He was President when this all happened. Or have you conveniently forgotten about that?
I agree with you this is pathetic
Omg. YOU ARE A COMPLETE MORON. No one can take people like you seriously. Lol. What a joke you are.