How much is the average tax refund in 2025? It depends on where you live

LOS ANGELES - If you’ve noticed your tax refund looking different this year—you’re not alone.

A new study by financial platform MoneyBot5000.com has found that while fewer Americans are receiving refunds in 2025, the average refund amount has increased, offering a rare financial boost during a time of economic uncertainty. 

The study draws on recent IRS data and analyzes tax return patterns across states and income brackets to give taxpayers a clearer picture of what to expect—and how to make the most of their refund.

Tax refunds in 2025: Fewer people, higher payouts

By the numbers:

According to IRS figures, the average tax refund in 2025 rose by about 2%, reaching over $2,600, even as the overall number of refunds filed declined by nearly 5%.

Several factors may be contributing to this shift, including changes in income brackets, tax withholding practices, and the availability of tax credits and deductions. 

For instance, pandemic-era policies such as the Recovery Rebate Credit no longer apply, which may be influencing the decline in refund counts. Still, for those receiving a refund, the payout is increasingly meaningful.

Geography matters: States with the biggest and smallest refunds

Local perspective:

Where you live can have a major impact on how much you get back. Using IRS data, MoneyBot5000.com ranked states by average refund size. Wyoming led the nation with an average refund of $9,957, while Alabama had the lowest at $2,821.

Here are the top 5 states with the highest average refunds:

• Wyoming – $9,957
• Mississippi – $8,006
• Nevada – $7,829
• Florida – $6,754
• Utah – $6,638

And the bottom 5 states:

• Delaware – $3,884
• California – $3,898
• New Mexico – $3,907
• New Jersey – $3,989
• Alabama – $2,821

Factors influencing these differences may include local tax policies, cost of living, and state-specific deductions or credits.

How income brackets affect your refund

Why you should care:

The study also broke down tax refund averages by income level. Generally, higher income brackets tend to yield larger refunds, though the relationship varies by state. 

A tax payer looks at his rebate check July 25, 2001 in New York City.  (Photo by Spencer Platt/Getty Images)

In Wyoming, for example, taxpayers in the top bracket received an average refund of around $71,000. Meanwhile, smaller brackets in states like Mississippi averaged between $1,000 and $7,000.

Interestingly, high-income states like New York, California, and Massachusetts did not rank in the top 10 for average refund size—suggesting that income level alone doesn’t determine how large your refund might be.

What to do with your refund

What you can do:

For taxpayers unsure how to put their refund to work, MoneyBot5000.com’s Spending Tracker tool offers tailored suggestions based on financial situation and life stage. Among their examples:

• A retiree with a $1,000 refund might prioritize emergency savings or health-related expenses
• A single person with a $5,000 refund could build a safety net, pay down debt, or invest
• A family of four with a $10,000 refund may benefit from paying down high-interest debt, contributing to college savings, or funding a family vacation
• A single parent with a $550 refund might focus on essential purchases, school supplies, or family bonding experiences

While online tools can provide guidance, MoneyBot5000.com recommends combining digital advice with professional financial planning to ensure long-term success.