Average IRS Tax Refund Is Up 10.6% This Season. Here's What CPAs Need to Know.

The average IRS tax refund is running $3,742 so far this season - up 10.6% from the same point last year. That's a $360 jump CPAs can use to manage client expectations during the final push to April 15.

As of Feb. 27, the IRS had processed 51.5 million individual returns out of about 164 million expected. The average refund peaked at $3,804 last week, then dipped slightly as the mid-February filers claiming the earned income tax credit and additional child tax credit cleared the pipeline.

This pattern repeats every year: refunds spike mid-February, then gradually decline through Tax Day. The Bipartisan Policy Center notes this is normal timing as different taxpayer segments file at different points in the season.

Why Refunds Are Bigger This Year

Four of Trump's new tax breaks - the deductions for tip income, overtime, seniors, and auto loan interest - all go on Schedule 1-A. As of March 4, 43% of returns included that form. Those filers saw refunds $775 bigger than the typical refund last year, according to IRS CEO Frank Bisignano during a House Ways and Means Committee hearing this week.

Tom O'Saben, director of tax content at the National Association of Tax Professionals, told CNBC he's seeing "hundreds of dollars of difference, not thousands." That tracks with what most practitioners are reporting: measurable increases, not windfall territory.

The bigger SALT deduction limit is also boosting refunds for itemizers in high-tax states. Combined with the slightly larger standard deduction and enhanced child tax credit for 2025, the changes are adding up - just not in the $1,000+ range the White House projected in late January.

What This Means for CPAs

First, $3,742 is your benchmark. When clients ask "is my refund normal?" you now have official IRS data through Feb. 27. The average is up from last year, but down from the mid-February peak - use that to explain refund timing.

Second, if your client filed with Schedule 1-A (tips, overtime, seniors, auto loan interest), expect a refund roughly $775 higher than their 2025 return. That's the cleanest comparison point based on actual IRS data, not projections.

Third, withholding still matters more than policy changes. A bigger refund doesn't always mean a bigger tax break - it often means the client overpaid throughout the year. Use this as a reminder to review W-4 elections and quarterly estimates for 2026.

The Political Context

Republicans are laser-focused on refund sizes heading into the midterms. The White House's January claim that refunds could jump "by $1,000 or more" was based on early October research from Piper Sandler - before actual filing data existed. Now that the IRS has released official numbers, the real increase is closer to $360 on average.

That's still meaningful. A 10.6% increase year-over-year is nothing to dismiss. But it's also not the windfall that was promised. CPAs caught between client expectations and political messaging should stick to the official IRS data: $3,742 average, up $360 from 2025, with Schedule 1-A filers seeing an extra $775 on average.

What Comes Next

The filing season is roughly one-third complete. The IRS expects 164 million returns by April 15. Based on current trends, the average refund will likely settle somewhere between $3,400 and $3,600 by season's end as later filers (who typically owe or claim smaller refunds) enter the mix.

For practitioners, this is your data point. Client asks about their refund? $3,742 is the current average. Client filed Schedule 1-A? Add $775 to last year's baseline. Client's refund is wildly different from those benchmarks? Time to review withholding and estimated payments for 2026.

The numbers are in. Use them.