Tax season is underway, and many Americans could see larger refunds this year.
Treasury Secretary Scott Bessent told CNBC Friday the average refund so far is up 22% compared to last year. The IRS reported that the average refund in 2025 was $3,052. A 22% increase would amount to roughly $671 more for the average filer.
The filing deadline is April 15.
It remains unclear what specific comparison Bessent used, and analysts caution that early refund data can fluctuate as more returns are processed. Historically, refunds are issued when taxpayers overpay through paycheck withholdings or estimated payments during the year. Those who owe typically did not have enough withheld.
President Donald Trump has said Americans will see historically large refunds following the passage of his ”One, Big, Beautiful Bill Act,” which includes new tax provisions such as eliminating taxes on tips and creating a tax credit for certain Social Security recipients.
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Credit card balances reach record levels
Larger refunds would come at a time when many households are under financial strain.
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Credit cards remain one of the most expensive forms of borrowing, with average interest rates of about 20%. About 60% of cardholders carry a balance from month to month.
The Federal Reserve Bank of New York reported this week that credit card balances climbed to an all-time high of $1.28 trillion. When adjusted for inflation, however, the balance is still below Great Recession levels. Its Survey of Consumer Expectations found more households reported being worse off financially than a year ago, with fewer expecting improvement over the next 12 months.
The New York Fed also pointed to what economists describe as a “K-shaped economy” — where higher-income households continue spending, while lower-income households struggle with auto loans, mortgages and credit card bills. Delinquencies are most pronounced in lower-income areas.
The National Foundation for Credit Counseling projects that financial stress will hit an all-time high in the first quarter of this year. CEO Mike Croxson said middle-income borrowers have “reached their capacity.”
Polls suggest about a third of people plan to use tax refunds to pay down debt.
Inflation cools in January
There was some encouraging economic data Friday.
The Consumer Price Index rose 2.4% in January compared to a year earlier, slightly below analysts’ expectations of 2.5%. It’s the lowest annual inflation rate since May 2025 — suggesting price increases are again slowing. Prices in January rose 0.2% from December.
Prices for energy and used cars and trucks are down year over year. Meanwhile, grocery prices rose 2.1% on the year, while food away from home costs 4% more than a year ago.
Heather Long, chief economist at Navy Federal Credit Union, told CNBC the report provides “much-needed relief for the middle class and moderate-income families.”
