Why is my tax refund so low this tax year?

Your tax refund is a big deal. If you’re like many people, tax season is a time to look forward to getting extra cash. But is it possible that you’d have a smaller tax refund than you anticipated when you filed your tax return?

If you’re wondering why you have received a smaller refund in 2025, there is something behind it.

Read on and we’ll discuss some potential reasons why your tax refund may be so low in 2025.

“Why is my tax refund so low in 2025?”

If you’re questioning why your tax refund is so low, you’re not the only one… Many taxpayers who have filed their tax return are wondering the same thing.

So, if your tax refund is less than expected for 2025, it could be due to a few reasons:

• No estimated taxes with gig income: Gig employment is on the rise due to more independent contracting opportunities. But not all gig workers know they need to pay estimated taxes for this type of income. Missing this step could mean an unexpected tax bill or a low refund in 2025. Or gig workers who earned more income but didn’t up their estimated payments may receive a lower refund at the end of tax season. Also, in some cases you may have paid a penalty for underpaying your estimated taxes. Check out our tax guide for gig workers for the essentials, including covering your self-employment taxes.
• Not accounting for withholding across multiple jobs: Each job you have will result in you having to fill out a separate W-4 Form. If you didn’t account for each job across your W-4s, you may not have withheld enough, so your tax refund could be less than expected in 2025. Or, if you had a salary increase in 2024 but didn’t update your tax withholding accordingly, you could receive a smaller refund.
• Not factoring eligibility changes for tax credits and deductions: There may be other impacts on your refund due to the credits you can take. For example, if your child turned 17 in 2024 before the end of the tax year, you may be eligible for a credit for other dependents worth a maximum of $500 instead of the Child Tax Credit, which is worth a maximum of $2,000.
• Unpaid debts: Your federal refund can be offset by certain unpaid items such as past due child support or an overdue state tax bill.

Bonus tip: Learn how to better manage your withholdings through our W-4 paycheck tax calculator.

Why do you get a refund from the IRS anyhow?

The Internal Revenue Service (IRS) will send you a refund if you overpaid throughout the year. For example, you could receive a refund because you withheld more tax than you owe or because you overestimated self-employment taxes.

In other cases, you may qualify for a refundable tax credit (like the Earned Income Tax Credit or Child Tax Credit) which means you get money back after you’ve covered your tax liability. In either case, if the taxes you owe are higher than the past or your available credits are lower, it could explain why you’re getting less back in taxes this year.

What to do if your tax refund is less than expected in 2025

If you’re surprised by a tax refund that is less than expected this tax year, not sure why your tax refund was reduced, or the complexity around taxes has got you stressed, H&R Block is here to help.

We can help you file your taxes, check your tax withholding, and understand your lower tax refund. Make an appointment to file with a tax pro or with H&R Block Online.