Income Taxes 2025: A Look at How This Year’s Election Could Affect Your Refund Amount Next Year
Federal income tax refunds have been remarkably consistent over the past decade or so, with average refunds tending to hover between about $2,750 and $2,900 from January through April each year. Given that track record, it’s unlikely that average refunds will fluctuate much no matter who wins the 2024 presidential election.
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That doesn’t mean there aren’t stark differences on tax policy between President Joe Biden and ex-President Donald Trump, the two main White House contenders this year. But in terms of how those policies impact your tax refund, they don’t play nearly as big a role as factors like your income, tax bracket, filing status, family size — and most importantly, how much tax you have withheld from your paychecks.
Tax-wise, the main thing to keep an eye on this election is the 2017 Tax Cuts and Jobs Act (TCJA) that Trump passed as president. The TCJA raised the standard deduction, lowered corporate and estate tax rates and increased the child tax credit.
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Those cuts are set to expire at the end of 2025. If Trump is re-elected in his 2024 rematch with Biden, you can expect the cuts to be made permanent. If Trump loses, the TCJA will likely expire, and income tax brackets will revert to their 2017 levels. This means you could see more taxes coming out of your paycheck. You might also see a smaller refund at tax time.
Prior to the TCJA, the U.S. had seven federal income tax brackets ranging from 10% to 39.6%. The TCJA lowered the rate for the top bracket to 37%. It also expanded the tax brackets, resulting in lower tax liabilities — and potentially larger tax refunds — for most taxpayers.
Trump has also floated the idea of eliminating federal income taxes altogether and using tariffs to help pay for government services. That’s a long shot. But if it somehow becomes law, you will no longer pay federal taxes or have the need for a refund. It might also lead to much higher prices on goods and services.
Here’s the average federal refund for each of the past five tax years, according to IRS data. All figures reflect averages just after the traditional April 15 filing deadline:
Tax year 2023: $2,850
Tax year 2022: $2,753
Tax year 2021: $3,012
Tax year 2020: $2,873
Tax year 2019: $2,781
As for tax policies, the Tax Foundation outlined these highlights from each of the two main candidates:
Joe Biden
Make the Child Tax Credit fully refundable on a permanent basis
Increase the CTC to $3,600 for young children and $3,000 for older children
Increase the Earned Income Tax Credit for workers without qualifying children on a permanent basis
Expand premium tax credits on a permanent basis
Donald Trump
Make the individual and estate tax cuts of the TCJA permanent
Consider replacing the income tax with tariffs
Exempt tips from income taxes
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This article originally appeared on GOBankingRates.com: Income Taxes 2025: A Look at How This Year’s Election Could Affect Your Refund Amount Next Year