Tax Refunds Are Up 10.6% This Year. Here's What CPAs Need to Tell Clients.

The IRS released new filing season data for the week ending Feb. 27. The average refund is up 10.6% year-over-year. Total refunds paid are up 9.4%.

Here's what CPAs need to know — and what to tell clients who are comparing their refund to last year.

The Numbers

As of Feb. 27, the average refund is $3,742. Last year at this time, it was $3,382. That's a $360 increase.

Total refunds issued so far: $136.5 billion, up from $124.8 billion in 2025. That's an increase of $11.7 billion.

But here's the twist: returns filed and processed are both down. The IRS has received 51.4 million returns (down 1.7% from last year) and processed 50.8 million (down 1.8%).

So fewer people are filing, but the ones who are filing are getting bigger refunds.

Why Refunds Are Up

Two big reasons.

First: EITC and Additional Child Tax Credit refunds just started hitting. Federal law requires the IRS to hold any refund that includes the Earned Income Tax Credit or the Additional Child Tax Credit until mid-February. Those refunds started going out a couple weeks ago.

EITC and ACTC refunds tend to be big. When they start flowing, the average refund jumps. That's what you're seeing now.

Second: the One Big Beautiful Bill Act is kicking in. The tax law changes passed last year are showing up on 2025 returns. No tax on overtime. No tax on tips. Auto loan interest deductions for American-made vehicles. All of that reduces taxable income, which means bigger refunds for people who overpaid via withholding.

The White House projected refunds would go up by an average of $1,000 in 2026. So far, they're on track.

But Expect the Average to Drop

Here's the thing: the average refund always spikes early in tax season, then levels out.

The people who file in January and February are usually expecting refunds. They file early because they want the money. That skews the average up.

As the April 15 deadline approaches, more people who owe taxes start filing. That brings the average down.

The IRS has said publicly that they expect the refund average to decline as the season goes on. It happens every year. So if your clients are seeing headlines about $3,742 refunds and expecting that, manage expectations.

What to Tell Clients

"Your refund depends on your withholding, not the average." A lot of clients think the average refund number is what they should get. It's not. The refund is just the difference between what they owe and what they already paid. If they want a bigger refund, they need to adjust withholding. If they want a smaller refund (and more cash in each paycheck), same thing.

"OBBBA provisions could mean a bigger refund this year." If your client worked overtime, earned tips, or took out a loan for an American-made car, their refund might be higher than expected. Make sure they're claiming those deductions.

"Don't compare your refund to last year without checking your withholding." If a client got $2,000 last year and $3,000 this year, that doesn't necessarily mean the tax law helped them. It might just mean they overpaid more via withholding. Check their total tax liability, not just the refund amount.

The Bigger Picture

Returns are down. Refunds are up. That tells you two things:

One, people who expect refunds are filing early. That's normal.

Two, the tax changes from OBBBA are real. Clients who qualify for those deductions are seeing bigger refunds.

But the April rush is coming. When people who owe money start filing, the averages will shift. Don't let clients anchor to the $3,742 number. It's not a promise. It's a snapshot.

And if you've got clients sitting on unfiled returns because they think they owe money — remind them the deadline is April 15. File on time or file for an extension. Penalties for late filing are steep, and the IRS isn't waiving them this year.