If your tax refund is lower than expected this year, you’re not the only one. Many taxpayers are noticing smaller refunds, and some are even facing delays. While this can be frustrating, understanding the reasons behind these changes can help you prepare better for next year. Let’s break down what’s happening and what you can do about it.
Why Is Your Tax Refund Lower This Year?
One of the biggest reasons for a smaller refund is the rollback of expanded tax credits. During the pandemic, tax credits like the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) were increased to provide financial relief. However, those temporary boosts have now expired. As a result, many taxpayers are getting less money back than they did in previous years.
Another reason could be income changes. If your earnings increased, you might no longer qualify for certain credits or may receive a reduced amount.
Additionally, the IRS might have used part of your refund to cover unpaid debts. This process, known as “offset,” happens if you owe:
- Federal or state taxes from previous years
- Child support payments
- Delinquent student loans
- Unemployment overpayments
If this happened to you, the IRS should have sent a notice explaining the deduction and where the money was applied.
What to Do If You Think There’s a Mistake
First, check the IRS notice carefully. It will explain why your refund was adjusted. If you believe there’s an error, contact the agency listed on the notice to dispute it.
You should also review your tax return to make sure all the information was entered correctly. A small mistake, like an incorrect Social Security number or missing income, can cause the IRS to adjust your refund amount.
To track your refund, visit the IRS website and use the “Where’s My Refund?” tool. If it has been more than 21 days since you filed electronically (or six weeks for paper filings), you can contact the IRS for an update.
How to Prepare for Next Year’s Tax Season
To avoid surprises in the future, consider adjusting your tax withholdings with your employer. The IRS Withholding Calculator can help you determine if you’re on the right track. You can also set aside extra savings if you owe money.
For more updates on tax season, check out our article on IRS tax season 2025 refunds: average $2,065.
Common Reasons for a Reduced Tax Refund
| Reason | Impact on Refund |
| Expired tax credit boosts | Lower refund amount |
| Increased income | Fewer qualifying deductions |
| Tax refund offset | IRS applies refund to unpaid debts |
| Errors in filing | Delays or adjustments in refund |
IRS Layoffs and Possible Delays
Another factor affecting refunds this year is IRS staffing changes. Reports indicate that the Department of Government Efficiency (DOGE) has started layoffs at the IRS, with around 7,000 workers expected to lose their jobs. These job cuts, focused on tax collection staff, could slow down tax processing and customer service. If you’re waiting for a refund, be prepared for possible delays.
FAQs
1. Why did the IRS take money from my refund?
The IRS may have used your refund to pay off past-due debts like federal taxes, child support, or student loans. Check the notice they sent you for details.
2. How can I check my tax refund status?
Use the “Where’s My Refund?” tool on the IRS website to track your refund. If it has been over 21 days since you filed electronically, you may contact the IRS.
3. Will IRS layoffs affect my tax refund?
Possibly. With fewer employees handling tax processing, some refunds might take longer to process this year.