WASHINGTON, Jan 26, 2026, 03:33 EST
- On Monday, the IRS began accepting 2025 federal tax returns, introducing new deductions under Trump’s 2025 tax law.
- Tax Foundation analysts warn that refunds might spike this year since withholding rules for 2025 stayed the same.
- To speed up refunds and reduce delays, the IRS is pushing for e-filing and direct deposit.
The Internal Revenue Service started accepting 2025 federal income tax returns on Monday, kicking off a season expected to see roughly 164 million filings by the April 15 deadline. This year, taxpayers will need to attach a new Schedule 1-A to Form 1040 for several deductions. “Our focus this filing season is to deliver improvements and effective service for taxpayers,” Acting IRS Commissioner Scott Bessent said. IRS
Many filers might get bigger refunds since employers kept using outdated withholding tables in 2025 — withholding being the income tax taken from each paycheck — even after President Donald Trump’s “One Big Beautiful Bill” was signed into law. “Most people have overwithheld their taxes to some extent,” Erica York, vice president of federal tax policy at the Tax Foundation, told Business Insider. The group projects the average refund could jump to $3,800 for the 2025 tax year, up from $3,052 the previous year, though Tax Foundation policy director Garrett Watson cautioned, “the average might conceal a lot of variation.” Business Insider
The law introduces new, temporary deductions for 2025 returns being filed now. Among them, many people aged 65 and older can claim an extra $6,000 deduction. There’s also a deduction of up to $25,000 for qualified reported tips. Additionally, it permits deductions on the “premium” portion of overtime pay, capped at $12,500 for individuals, and up to $10,000 in interest on certain car loans. These benefits come with income limits and phase-outs. IRS
Other tweaks can make the return seem different, even if a taxpayer’s income barely shifts. Kiplinger noted that the cap on the state and local tax deduction, or SALT, jumps to $40,000 for 2025 filings, up from $10,000.
The IRS announced it won’t update some payroll forms and withholding tables for tax year 2025, aiming to prevent disruptions and give employers more time to adjust. As a result, many paychecks won’t align with the new law next year. Employers and payroll services have been instructed to stick with the current reporting and withholding rules for 2025.
Taxpayers seeking the quickest turnaround should stick to electronic filing and direct deposit, the IRS advises. It promises electronic refunds in under 21 days if everything checks out, whereas paper refunds sent through the mail might take six weeks or more.
Tracking refunds remains a top priority. The IRS “Where’s My Refund?” tool usually updates about 24 hours after an e-filed return, but paper returns take longer to appear, according to the San Antonio Express-News. To check, taxpayers must have their Social Security number or ITIN — a tax ID for those without a Social Security number — along with filing status and the precise refund amount. MySA
Free filing options are growing just as paid preparers gear up for more business. The IRS announced that its Free File Fillable Forms open on Jan. 26, while the Free File program remains available to lower- and middle-income filers through partner providers. Many others still rely on paid services like Intuit’s TurboTax and H&R Block.
A larger refund often means too much tax was taken out throughout the year, shrinking each paycheck. The key tool here is the W-4 form, which employees submit to their employers to set withholding amounts.
Refunds aren’t assured to increase, and the new benefits won’t reach everyone. Errors, missing forms, or mismatched reports on tips and overtime can stall returns. Paper filers still face the biggest risk of delays.
