No — refund size changes based on your specific situation, not a blanket trend
Tax refunds are not rising or falling for everyone at once. Your refund depends on how much tax you paid during the year versus how much you actually owe, and that calculation is different for every person. One person might get a larger refund this year because they changed jobs, got married, or had a child. Another might get less because they earned more income or claimed fewer deductions. There is no single answer that applies to "everyone."
The size of your refund is determined by the difference between what your employer withheld from your paychecks and what you owe based on your final tax return. If you want to predict whether your refund will be bigger or smaller, you need to look at your own circumstances — not national trends or what happened to someone else.
Key Takeaways
- Your refund size depends only on your income, deductions, and withholding — not on what other people are receiving.
- If you earned more money this year than last year, your refund may be smaller unless you also increased your withholding.
- Major life changes like marriage, divorce, having a child, or buying a home can significantly change your refund amount.
- You can estimate your refund by comparing your total withholding to your expected tax bill using the IRS Withholding Estimator tool.
What actually determines your refund amount
Your refund is the money left over after you pay what you owe. Think of it this way: throughout the year, your employer takes money out of each paycheck and sends it to the IRS. That money is called withholding. When you file your tax return, the IRS calculates exactly how much tax you should have paid based on your income, deductions, and credits. If you paid more than you owed, you get the difference back as a refund. If you paid less, you owe the difference.
The amount withheld from your paycheck is based on a form you fill out called the W-4. This form tells your employer how much to take out. If you claim zero dependents on your W-4, more money comes out of each check. If you claim more dependents, less comes out. The more you have withheld, the larger your refund is likely to be — but that also means you had less money to spend during the year.
Your actual tax bill depends on your income, the deductions you claim, and any tax credits you receive. Tax credits are especially powerful because they reduce your bill dollar-for-dollar. The Child Tax Credit, the Earned Income Tax Credit, and education credits can all make your refund much larger.
Why your refund might be different this year
If your refund is larger than last year, one of these things probably happened: you earned less income, you increased your withholding, you claimed a new tax credit, or you had a major life change that increased your deductions. For example, if you got married and filed jointly for the first time, your tax bracket might be lower. If you had a baby, you can claim the Child Tax Credit. If you bought a house, you might deduct mortgage interest.
If your refund is smaller, the opposite is usually true: you earned more income, you decreased your withholding, you lost a tax credit you claimed last year, or a life change reduced your deductions. If you got a raise or took on a second job, more of your income is subject to tax. If you got divorced, you can no longer claim your ex-spouse as a dependent. If you paid off your mortgage, you lose the mortgage interest deduction.
Changes to the tax code itself happen occasionally, but they are rare and affect most people in the same direction. For instance, the standard deduction amount changes slightly each year to account for inflation, but this affects nearly everyone the same way. What matters much more is what changed in your personal situation.
How to estimate whether your refund will be bigger or smaller
The IRS provides a free tool called the IRS Withholding Estimator, available on IRS.gov. You enter information about your income, deductions, and credits, and the tool tells you whether you are having too much or too little withheld. This is the most accurate way to predict your refund before you file.
You can also do a rough calculation yourself. Add up all the money withheld from your paychecks during the year — this appears on your pay stubs. Then estimate your total tax bill using last year's return as a starting point, but adjust for any income changes, new dependents, or major deductions. If your withholding is higher than your estimated bill, you will likely get a refund. The bigger the gap, the bigger the refund.
If you find that you are having too little withheld and will owe money instead of getting a refund, you can adjust your W-4 with your employer. If you are having too much withheld and want more money in each paycheck, you can also adjust your W-4. These changes take effect on your next paycheck.
Common reasons refunds change year to year
A new job or job change is one of the biggest reasons refunds shift. When you start a new job, you fill out a new W-4, and if you fill it out differently than before, your withholding changes when ready. If you had two jobs at different times during the year, the withholding from both jobs combined might be more or less than you need.
Income changes matter too. If you got a significant raise, your refund will likely be smaller unless you also increased your withholding. If you earned less — perhaps because you were unemployed for part of the year — your refund might be larger. Self-employment income, investment income, and side gig income all affect your refund if you did not have taxes withheld from them.
Family changes have major effects. Getting married, having a child, adopting, or getting divorced all change your tax situation. Each dependent you claim reduces your tax bill. Tax credits for children, education, and childcare can turn a small refund into a large one or a tax bill into a refund.
Deduction changes also shift your refund. If you bought a home and started paying mortgage interest, or if you paid off your mortgage, your deductions change. If you started or stopped paying student loan interest, that affects your refund too. Charitable donations, medical expenses, and state and local taxes can all change from year to year.
What to do if your refund surprises you
If you get a much larger refund than you expected, that means you had too much withheld during the year. You gave the government an interest-free loan. If you want to keep more of your money in each paycheck instead, you can adjust your W-4 by claiming more dependents or using the "extra income" line. Talk to your payroll department about how to make the change.
If you get a much smaller refund than you expected, or if you owe money instead, you had too little withheld. You can adjust your W-4 to have more taken out going forward. If you owe a significant amount, you might want to set up a payment plan with the IRS, or you can pay the full amount when you file.
Keep in mind that a large refund is not a bonus — it is your own money that you overpaid. Many people like getting a large refund because it feels like a windfall, but from a financial planning perspective, it is usually better to have the right amount withheld so you can use your money throughout the year.
Frequently Asked Questions
Is the IRS giving out bigger refunds this year?
No. The IRS does not decide refund amounts — your personal tax situation does. Refunds vary widely from person to person based on income, withholding, deductions, and credits. Some people will get larger refunds this year, and some will get smaller ones.
Why was my refund so much smaller than last year?
The most common reasons are: you earned more income, you decreased your withholding on your W-4, you lost a tax credit or deduction you had last year, or a life change affected your tax situation. Compare your income, dependents, and deductions between the two years to find the difference.
Can I get a bigger refund by changing my W-4?
Yes, but it comes at a cost. If you claim fewer dependents on your W-4, more money is withheld from each paycheck, which means you have less to spend during the year. You will get a larger refund, but you are essentially giving the government an interest-free loan.
What if I owe money instead of getting a refund?
You can pay in full when you file, set up a payment plan with the IRS, or request a short-term extension to pay. Going forward, adjust your W-4 to have more withheld so you do not owe next year.
How do I know if I am having the right amount withheld?
Use the IRS Withholding Estimator on IRS.gov. It asks about your income, deductions, and credits, then tells you whether you are having too much or too little taken out. Ideally, you want to owe very little or get a small refund — that means you had the right amount withheld.