The 2025 tax season has marked one of the slowest starts for the Internal Revenue Service (IRS), presenting numerous challenges for American taxpayers. Reports indicate fewer individuals are filing their returns, processing times are lagging, and average refund amounts have drastically decreased. According to IRS data from the week ending February 14, 2025, the agency had received approximately 33.04 million individual income tax returns, indicating a 4.9% drop from the previous year’s figures. Alongside this decline, taxpayers are witnessing the most significant reductions in refund amounts—a staggering 32.4% drop from $3,207 to $2,169 on average.
Several underlying factors contribute to this disconcerting trend. A notable aspect involves workforce changes at the IRS itself. Over 6,000 IRS employees have recently been laid off, part of broader cuts initiated post-pandemic and influenced by policies from the previous Trump administration. The reduced workforce has raised alarms about slower processing times and possible delays for taxpayers awaiting refunds.
Adding to taxpayer anxiety, privacy concerns have arisen following reports of Elon Musk's Department of Government Efficiency (DOGE) requesting sensitive taxpayer data. Although the Justice Department has temporarily blocked this access, the fears surrounding the IRS's capacity to protect personal information have compounded the reluctance of taxpayers to file early this year.
The political climate surrounding tax filing has also contributed to the sluggish response. President Trump has been vocal about his goal to abolish the IRS, leading some taxpayers to question the necessity of filing altogether. Such sentiments were echoed by Michael Sylvester, managing partner at Small Business Services CPA Group, who shared instances of clients expressing resistance to fulfilling their tax obligations, attributing it to concerns about wasteful government spending.
Traffic to the IRS official website has mirrored these trends, plummeting by 46.3% compared to the previous year. Added complications arise from the IRS’s limited communication; only six press releases have been published since the start of the tax season, each requiring approval from the Treasury Department.
This year’s refund situation is particularly troubling. From the 13.66 million refunds issued up to mid-February, there was a 34.6% decline from last year when nearly 20.88 million refunds were distributed. The IRS has acknowledged potential improvements, mentioning refunds tied to the Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC) would begin issuing on March 3, 2025, after necessary delays due to federal rules mandatorily holding those refunds until mid-February.
Is this merely seasonal slump? Although the IRS remains optimistic about recovery as the April 2025 tax deadline looms, external factors play heavily on taxpayer behavior. Taxpayers are encouraged to file as early as feasible. Christina Wease, director of the Alvin L. Storrs Low-Income Taxpayer Clinic, urged, "Taxpayers should proceed as normal.” Despite the turbulence, clear filing timelines and rules still apply, and procrastination may result in penalties or delays.
Looking toward the future, the anticipated flux of tax submissions could alter the current standing. IRS projections suggest filing numbers should stabilize as the deadline approaches, yet numerous uncertainties hang over this year’s tax season.
Potential delays might be exacerbated by the IRS’s attempt to conduct thorough fraud checks on certain returns, especially those claiming the EITC and ACTC. Therefore, taxpayers should brace themselves for not only smaller refunds but also possibly longer waiting periods for processing their returns due to heightened scrutiny mechanisms.
Yet, taxpayers shouldn’t lose heart. For individuals who file electronic returns and opt for direct deposits, refunds are typically received within 21 days. The IRS’s online tool, "Where's My Refund?" remains available to check the status of refunds and empower filers amid uncertainty. Providing accurate information during filing is key to mitigating delays.
Despite the many challenges posed during this tax season, the elements contributing to confusion and frustration can serve as useful reminders to approach the tax process proactively. Through diligent early filing, adopting precautions, and staying informed on the status of their returns, taxpayers can alleviate some burdens of the 2025 tax season.