As Americans receive their tax refunds this spring, some are seeing a sizable windfall from last year, while others are getting only a few hundred dollars’ difference — and the reasons may not be immediately clear to them.

President Donald Trump has said this will be the “largest tax refund season of all time,” as a result of legislation dubbed the One Big Beautiful Bill Act, a multitrillion-dollar package of tax and spending cuts that Republicans passed in July.

In a Jan. 26 release, the White House said the average taxpayer could receive an extra $1,000 or more, citing early October data from investment bank Piper Sandler. But the average refund hasn’t grown that much, IRS filing data shows. 

As of March 20, the average refund amount for individual filers was $3,571, up from $3,221 about one year prior, the IRS reported Friday.

This season, the average refund size peaked at $3,804 on Feb. 20, up from $3,453 about one year prior, due to refundable tax credits, and has gradually declined over subsequent weeks of IRS filing updates.

Still, Trump’s tax breaks have delivered above-average refunds for certain filers, according to the IRS.

During a March 4 House Ways and Means Committee hearing, Frank Bisignano, Social Security Administration commissioner and IRS CEO, said filers claiming Trump’s new tax breaks were already seeing average refunds that were $775 higher than last year. These returns have included the new Schedule 1-A, which feeds into individual tax returns, and covers Trump’s new deductions for tip income, overtime earnings, seniors and auto loan interest.  

At the same time, lawmakers’ nicknames for “big beautiful bill” provisions don’t reflect how they work. For example, a so-called “no tax on Social Security” provision does not change how benefits are taxed, and can be claimed even if you’re not receiving Social Security.

White House spokesman Kush Desai told CNBC in an emailed statement that the president “has delivered on his pledge for no tax on tips or Social Security.”

Asked about tax refunds, he said it’s “premature to make any pronouncements about the average.”

“What the data does show, however, is that millions of working class Americans who were meant to get tax relief — through no tax on overtime, tips, or Social Security — are taking advantage of President Trump’s historic tax cut legislation,” he said.

Tax refunds can be a powerful talking point ahead of the midterm elections, experts say, especially given broader consumer concerns about the economy and affordability.

“In many ways, the president needs to be the ‘Explainer in Chief’ when it comes to getting credit for policies,” Todd Belt, a professor at George Washington University’s Graduate School of Political Management, wrote in an e-mail. “If Trump wants credit for tax refund windfalls for voters, he’s going to need to continue to explain that this was a result of the One Big Beautiful Bill.”

The GOP has tried rebranding the law as the “Working Families Tax Cuts,” but that marketing likely won’t do much to sway an “inattentive” public ahead of the midterm elections, Belt said.

At a March 11 rally in Kentucky, Trump aimed to bolster support among voters while discussing a tax break for overtime pay.

“That means every extra hour you work, your overtime pay is now 100% tax free,” Trump said. “You have no tax. Remember that when you go and vote.”

In practice, how the “big beautiful bill” and other forces affect your tax filing comes down to the particulars of your situation. Not everyone will benefit from the much-talked-about changes due to various rules and eligibility restrictions — and the financial sums involved may be smaller than you think.

The IRS expects about 164 million individual tax returns before the April 15 deadline.

Here are some of the key factors that may influence the size of your refund this year, ordered by how many American taxpayers stand to benefit.

Bigger standard deduction

What it means for your taxes: For 2025 tax returns, the standard deduction is $31,500 for married couples filing jointly, $23,625 for heads of household, and $15,750 for single filers or married couples filing separately. Those are up $1,500, $1,125 and $750, respectively, from the figures the IRS previously announced for 2025.

Most taxpayers claim the standard deduction, accounting for about 91% of returns in 2022, according to the most recently available IRS data. 

What to know: Once you calculate your income for the year, you get to reduce how much of it is subject to federal tax by either claiming the standard deduction — a set amount available to all taxpayers — or “itemizing” deductions. Itemized deductions include mortgage interest, medical expenses above a certain threshold, charitable donations, and state and local taxes and property taxes, known as SALT. 

For 2025 returns, experts say a larger share of taxpayers may itemize than in recent years. This is due to changes made to the SALT deduction in Trump’s bill.

— Sarah Agostino

Unchanged withholding tables

What changed: Nothing. Although Trump’s legislation included several 2025 tax changes, the IRS didn’t update withholding tables for employers, which dictate how much to take from workers’ paychecks.

What it means for your taxes: With no change to withholding tables, many workers overpaid taxes in 2025 and could see bigger refunds when filing during the 2026 season.

The majority of U.S. filers — roughly 80%, according to IRS data from 2022 — report wages on Form W-2.

What to know: So-called W-2 workers pay taxes via paycheck withholdings, and typically see a refund when they overpay throughout the year. Alternatively, there’s generally a balance due when they don’t withhold enough.  

— Kate Dore

New ‘no tax on overtime’ deduction

What changed: Trump’s new law added the “no tax on overtime” deduction, which allows certain workers to deduct a portion of eligible overtime pay on federal returns from 2025 to 2028.

While the tax break is called “no tax on overtime,” it does not eliminate all taxes on this type of compensation. 

What it means for your taxes: The deduction is up to $12,500 for single filers or $25,000 for joint filers per year. It’s not an itemized deduction, which means workers claiming the standard deduction can still benefit. 

The overtime deduction applies to compensation covered under the Fair Labor Standards Act, or FLSA. This law says non-exempt employees must receive at least 1.5 times their normal pay rate once they exceed 40 hours per week. This definition excludes some workers covered by state or labor contract mandates.         

In 2023, about 98 million employed workers were eligible for overtime under the FLSA, according to a 2024 analysis from The Budget Lab at Yale. But only 8% of hourly workers and 4% of salaried workers have FLSA-qualified overtime on a regular basis.  

Typically, overtime pay is most common in sectors such as manufacturing, health care, transportation, and public safety, according to a Feb. 10 report from the Cato Institute, a libertarian think tank. 

What to know: The overtime tax break phases out, or gets smaller, once modified adjusted gross income is above $150,000 for single filers or $300,000 for married couples filing jointly.  

The deduction only applies to compensation above your normal pay — the “half” portion of “time-and-a-half,” according to IRS guidance from November. However, many workers won’t see overtime reported by employers on so-called information returns, such as Forms W-2 or 1099-NEC, because the IRS waived the requirement for 2025. 

That could be “very confusing” when filing returns this season, according to certified financial planner and certified public accountant Micha Siegel, founder of TaxCentric, an advisory firm in Fair Lawn, New Jersey.

If your employer doesn’t report overtime on your tax forms, you can calculate the deduction from your final 2025 paystub, Siegel said. Take your total overtime pay and divide by three if overtime pay is 1.5 times your normal rate.      

— Kate Dore

Expanded child tax credit

What changed: The bill made permanent a Tax Cuts and Jobs Act provision boosting the maximum child tax credit and increased its value. 

The legislation also introduced a new eligibility requirement: At least one parent needs to have a Social Security number to claim the credit. Previously, taxpayers could use an individual taxpayer identification number to claim the child tax credit, but that’s no longer the case, said Lisa Greene-Lewis, a CPA and TurboTax expert. 

What it means for your taxes: For 2025, the maximum credit is $2,200, up from $2,000. The refundable portion of the credit, known as the additional child tax credit, is worth up to $1,700 per child, depending on the taxpayer’s income. Filers who don’t owe taxes but have a qualifying child can get up to $1,700 in the form of a tax refund through the additional child tax credit.

Families of an estimated 42.4 million children are eligible to benefit from the maximum credit amount in calendar year 2026, according to the Tax Policy Center. Families of an additional 18.6 million children are eligible to receive a portion of the credit. 

But 4.5 million children could lose access to the credit due to the parental Social Security number requirement, according to estimates from the Center for Migration Studies.

What to know: The child tax credit is a partially refundable tax credit for taxpayers with “qualifying children,” according to the IRS. Children who qualify are under 17 years old at the end of the tax year, have a valid Social Security number, live with the parent claiming the credit for at least half the year, and meet other eligibility requirements, the IRS says.

Taxpayers must earn at least $2,500 to be eligible for any portion of the credit, and the credit amount starts to phase out for individuals earning $200,000 or more a year or married couples earning $400,000 or more a year.

— Kamaron McNair

New senior ‘bonus’ deduction 

What changed: The bill created a new tax deduction for taxpayers ages 65 and older, dubbed the senior “bonus.” It is in effect from tax years 2025 through 2028. 

While the Trump administration has touted the measure as eliminating taxes on Social Security benefits, the change does not alter how Social Security benefits are taxed.

What it means for your taxes: The new senior deduction is worth up to $6,000 per person, or up to $12,000 for married couples filing jointly. To qualify, taxpayers must be age 65 on or before the last day of the tax year. 

The new senior deduction may benefit an estimated 33.9 million Americans, including individuals who are not Social Security beneficiaries, according to the Council of Economic Advisers, an agency within the president’s executive office. The deduction may provide an average increase in after-tax income of $670 per eligible senior, according to the agency.

When the “senior bonus” is combined with other tax breaks, older Americans may see their federal tax liability significantly reduced or eliminated altogether. An estimated 88% of all seniors receiving Social Security income will not pay taxes on their benefits as a result of their total deductions, according to the Council of Economic Advisers.

“What is the one group of people who are going to be benefiting most from tax changes in the past year? It’s almost certainly going to be seniors and retirees,” said Alex Durante, senior economist at the Tax Foundation.

What to know: The full $6,000 senior deduction is available to qualifying individuals with up to $75,000 in modified adjusted gross income. Married couples may be eligible for up to $12,000, so long as both individuals qualify for the deduction, if they have income up to $150,000.

The deduction is gradually reduced for individuals and couples with incomes above those thresholds and fully phases out for individuals with $175,000 in modified adjusted gross income and married couples filing jointly with $250,000.

Tax professionals say people 65 and over may want to plan their income for this and future years to maximize their ability to qualify for the full amount. 

— Lorie Konish

What it means for your taxes:  For 2025, the SALT deduction cap is $40,000. To claim SALT, total itemized deductions must exceed the standard deduction. 

During tax year 2022, roughly 15 million returns claimed the SALT deduction, which is fewer than 10% of filings, based on the latest IRS data. But the higher SALT cap for 2025 means more filers could itemize, experts say.

The SALT change could drive the “biggest increases in refund size” for 2025 returns, according to Andrew Lautz, director of tax policy for the Bipartisan Policy Center, a nonprofit think tank.

Those living in a high-tax state could see a bigger refund this season based on the change, and higher earners primarily benefit, according to a May analysis of several proposals from the Tax Foundation. 

What to know: The tax break includes property taxes plus either state and local income or sales taxes, but not both. 

That benefit starts to phase out, or get smaller, for filers with modified adjusted gross income above $500,000. That threshold and the $40,000 deduction limit will increase by 1% annually through 2029. After that, the higher SALT cap reverts to $10,000 in 2030. 

— Kate Dore

New ‘no tax on tips’ deduction

What changed: Trump’s legislation added the “no tax on tips” deduction, which allows certain workers to deduct a portion of “qualified tips” on federal returns from 2025 to 2028. 

Although the tax break is called “no tax on tips,” it does not eliminate all taxes on compensation for tipped workers. 

What it means for your taxes: Workers can deduct up to $25,000 of tips, provided they meet certain requirements. Since it’s not an itemized deduction, workers who claim the standard deduction can still benefit. 

An estimated 6 million workers report tipped wages, according to IRS estimates from November. But not all tipped workers qualify.

Under the law, certain workers who receive tips via so-called “specified service trade or businesses,” or SSTBs, from industries including health care, legal, financial services, performing arts and others, are not eligible for the tax break. 

Some low-income filers won’t benefit because they don’t typically pay federal income tax, Elena Patel, co-director of the Urban-Brookings Tax Policy Center, told CNBC.

What to know: The tips deduction phases out, or gets smaller, once modified adjusted gross income exceeds $150,000 for single filers or $300,000 for married couples filing jointly.   

To qualify, tips must be received voluntarily, not negotiated, and for a job that “customarily and regularly received tips” before 2025, according to IRS guidance. This may include tips paid via cash, credit card, tip-sharing arrangements and more.

SSTB workers may be able to temporarily claim the deduction for 2025 until the Treasury and IRS finalize regulations, based on “transition relief” from November, experts say.   

For 2025 only, some workers won’t see tips reported on information returns, such as Forms W-2 or 1099. That will change for 2026 when only employer-reported tips will count for the deduction. In the meantime, the IRS published guidance on possible scenarios tipped workers could see this season.  

— Kate Dore

New auto loan interest deduction 

What changed: Taxpayers may be able to deduct auto loan interest paid under a new, temporary provision enacted as part of the “big beautiful” law. The deduction applies only to certain new-vehicle purchases and is available for tax years 2025 through 2028.

While the provision is titled “No tax on car loan interest,” it doesn’t eliminate taxes on auto loan interest but instead allows eligible taxpayers to deduct qualifying interest, which can lower their tax bill.

What it means for your taxes: The provision allows borrowers to deduct up to $10,000 in qualified auto loan interest.

Few buyers are likely to see their tax bill reduced by anything close to $10,000. It would take a loan of roughly $112,000 to generate $10,000 in deductible interest in the first year alone, according to data from Cox Automotive, an auto industry data firm.

Assuming a federal tax rate of about 15% to 20% for new-vehicle buyers and a loan balance of $42,000, the first-year deduction would translate into less than $750 in tax savings, falling to about $640 in the second year as interest costs decline, according to Cox.

Auto loan originations totaled 23.4 million through November 2025, for both new and used vehicles, according to Equifax. Because the deduction applies only to certain new vehicles and phases out at higher incomes, only a fraction of those borrowers are likely to qualify.

What to know: The auto loan interest deduction phases out at higher income levels. For single filers, the phaseout begins at $100,000 of modified adjusted gross income and ends at $150,000. For married couples filing jointly, the phaseout begins at $200,000 and ends at $250,000.

To qualify, the loan must meet several requirements, according to the Internal Revenue Service. Among them: The vehicle must be new, for personal use and have undergone final assembly in the United States.

Taxpayers must include the vehicle identification number for any year the deduction is claimed, and lenders must provide a statement showing the total interest paid on a qualifying vehicle loan.

— Mike Winters

Social Security Fairness Act payments 

What changed: The Social Security Fairness Act, which President Joe Biden signed into law on Jan. 5, 2025, provides certain Social Security beneficiaries with higher monthly Social Security benefits and one-time retroactive lump-sum payments.

The law eliminated two provisions that previously adjusted benefits for some individuals: the Windfall Elimination Provision, or WEP, which reduced Social Security benefits for people with pensions from jobs not covered by Social Security, and the Government Pension Offset, or GPO, which adjusted Social Security spousal or widower benefits for individuals who also receive pension income from jobs where Social Security taxes were not withheld.

What it means for your taxes: “If you’re getting higher benefits because of the Social Security Fairness Act, some percentage of those are going to be taxable,” Alex Durante, senior economist at the Tax Foundation, recently told CNBC.com. The senior “bonus” and other breaks may help mitigate the effect, however.

The law affects more than 2.8 million people. Those include individuals who have pension income from work that did not require Social Security payroll tax contributions, such as certain state teachers, firefighters and police officers; federal employees covered by the Civil Service Retirement System; and people who have worked under a foreign social security system.

What to know: The SSA-1099 forms show the total amount of benefits received for the year. They are sent to beneficiaries either online or by mail, and are also shared with the IRS. 

“This is the first year beneficiaries have seen the payments from the [Social Security Fairness Act] in their SSA-1099s,” a Social Security spokesperson told CNBC.com via email. The lump-sum payments will appear on their SSA-1099 statements, too.

Recipients of those retroactive payments may want to consider checking the “lump-sum election” box on their return, said Lawrence Pon, a CFP and CPA at Pon & Associates in Redwood City, California.

The lump-sum election lets beneficiaries recalculate their taxable benefits for a prior year by subtracting the taxable benefits they previously reported. The remaining amount is the taxable part of the lump-sum payment to report for 2025.

The option can reduce taxes on that one-time payment and does not require amending a prior return, according to the IRS.

— Lorie Konish

Tax credits and deductions can both lower a household’s tax bill. However, they do so in different ways.

For example, let’s say your tax liability is $5,000. A $1,000 tax credit would reduce your bill to $4,000. You can find your tax liability on line 24 of a Form 1040.

Many tax credits have eligibility requirements. They’re worth the same amount for anyone who can claim their full value — which isn’t true of tax deductions (more on that below).

There are three types of tax credits: Refundable, partially refundable and nonrefundable.

With partially and fully refundable credits, tax filers can receive some or all of the tax credit’s value even if it exceeds their tax bill. In other words, the IRS would send a tax refund. 

However, many credits are nonrefundable. In this case, the credit can reduce your tax bill to $0, but you wouldn’t get a refund.

The child tax credit and earned income tax credit are the two most popular credits, claimed by about 38 million and 24 million individual tax returns in 2022, respectively, according to IRS data.

Consider this example from Fidelity Investments: If your income is $75,000 and you have $15,000 worth of tax deductions, you will only be taxed on $60,000.

Tax deductions could reduce your tax bill to $0 — but, like nonrefundable tax credits, they can’t generate a refund.

Deductions are generally worth more to higher earners.

For example, a taxpayer in the 10% income tax bracket with a $1,000 deduction saves $100 in taxes, according to the Tax Foundation. Someone in the 32% bracket with a $1,000 deduction saves $320 in taxes — about three times more.

Taxpayers must choose between the standard deduction and “itemizing” their tax deductions when filing a tax return.

Taxpayers generally choose to itemize if the value of their itemized deductions — such as mortgage interest, state and local taxes and certain medical expenses — exceeds that of the standard deduction.

There are also deductions taxpayers can claim regardless of whether they itemize or claim the standard deduction.

These so-called “above the line” deductions include certain retirement contributions and interest on student loans.

— Greg Iacurci