Ready for a bigger tax refund?

With tax season just around the corner, it is not a big surprise that most Americans are waiting for their refund check. This is when you get back the money you overpaid throughout the year.

The first thing you need to keep in mind is that your tax refund is not a bonus. This is the excess money you handed over to the government. As a result, a larger tax refund means you managed to successfully give the government an interest-free loan.

A large refund may signal that you are under-deducting or over-withholding from the paychecks, indicating that you should reconsider your tax strategy. Instead of waiting till the end of the year to receive your money back, increasing the amount you withhold now could allow you to maintain more of your earnings for investment or day-to-day spending.

When we analyze 2025, we can notice a couple of reasons you might get a larger tax refund. From changes in the tax law to adjustments in withholding practices, read on to find out how your taxable income will be affected this year.

Charitable contributions

If you are up for something like this, you need to know that this is a win-win situation for both your tax situation and the community you are a part of. The best part is that tax deductions based on charitable work can be applied to cash donations and also to “in-kind” donations, such as donating clothing to your local Goodwill.

All you have to do in order to take advantage of it is fill out Schedule A. Compared to the standard deduction, which most taxpayers claim if it surpasses their whole list of deductions, Schedule A allows you to identify particular costs that reduce your taxable income, resulting in a bigger tax refund.

If you have large medical expenses or you have mortgage interest deductions from owning a home, charitable contributions can truly help you get more money. If your donations and the above-mentioned expenses exceed the standard deduction, filling out Schedule A and itemizing seems to become the best option out there.

If you itemize, you can deduct the whole amount of charitable gifts from your adjusted gross income. This minimizes the amount of income that is taxable, which lowers your overall tax burden.

Self-employment deductions

If you are a small business owner and self-employed, you may be able to get a bigger tax refund. The law allows you to claim a wide range of deductions for “reasonable and necessary” business expenses and operations. This means you can deduct the cost of office supplies, equipment, travel expenses, software subscriptions, and sometimes even home expenses if you have a dedicated workspace.

If you can own fewer taxes, why wouldn’t you? Every dollar you deduct using your business is a dollar that will be added to your tax refund. But be careful since you need to keep strict records. The IRS might request verification, so make sure you keep receipts, invoices, and bank statements to document your expenses.

Laws can be quite complicated, and they vary from state to state. This is why we suggest you work with a Certified Public Accountant (CPA) or another tax professional to be sure that things are done properly.

You had the same or less income as last year

If you compare your earnings to the ones from last year and you notice you earned the same or even less, this means you might be eligible for a bigger tax refund. At first, when you look at it, you might find this kind of counterintuitive, but it all can be explained by the inflation adjustments built into the tax code.

When inflation is bigger, the tax brackets widen, the standard deduction rises, and your income needs to be recalculated. When this happens, you have the chance of falling into a lower tax bracket or benefiting from higher deductions than you did in 2024.

This is a very effective way of making sure taxpayers don’t end up in an unjust manner in a higher tax bracket simply because of inflation. If your income does not rise, you will pay less in taxes since the deductions and rates change higher, lowering the percentage of income that is taxable. This leads to a bigger tax refund.

If you have money lost on stocks

Taxable investment accounts that are not retirement accounts, such as stocks, bonds, or mutual funds, are a great opportunity to get a bigger tax refund if you experience any losses on your investments. This strategy is known as loss harvesting.

For instance, if you traded stock at a loss, the loss will decrease the sum of capital gains you must record, resulting in a lesser tax payment. If your losses outweigh your earnings, you may deduct up to $3,000 from your regular income, with any extra losses passed forward for future years.

If your income does not rise, you will pay less in taxes since deductions and brackets shift higher, lowering the amount of income taxed. As a consequence, you receive a larger tax refund.

However, tax harvesting requires a lot of planning and proper documentation. The IRS regulations need to be respected, and you are the one responsible for this.

Tax credits

If you plan to reduce the amount of tax you owe and increase your tax refund, then using tax credits is an amazing strategy. These credits are basically government incentives and are meant to encourage various actions that benefit society or the environment. So, if you make your home more energy efficient, your tax bill will be reduced.

If you install energy-efficient furnaces, air conditioning units, solar panels, washers, or dryers, you could qualify for significant credits. Besides lowering your tax burden, these modifications will also lower your energy bills, so it’s a win-win situation.

But green energy credits are not the only credits. The Earned Income Tax Credit (EITC) is a measure that helps low-to-moderate-income taxpayers get their taxes reduced. There are also education or childcare credits some might be eligible for.

These tax credits require fulfillment of specific criteria such as income levels and certain costs. It is critical to assess your financial status and speak with a tax professional for information on which credits you may be qualified for.

You’ve significantly contributed to your retirement accounts

If last year was a good one for your retirement accounts, then we have some good news! This might mean that you might get a larger tax return this year. Contributing extra to a 401(k) or other comparable retirement plan reduces the sum of revenue that is taxed in the current year. This implies that rather than owing taxes on every dollar earned, you save some of it by delaying taxes on your retirement funds.

This is the way the government tries to encourage retirees to prepare for their golden years and have some extra money besides Social Security. Let’s say that there is a couple in the 22% tax bracket. This means they have a joint taxable income of between $100,000 and $200,000.

In this bracket, you pay about 22 cents on every dollar in taxes. But the trick is that if you contribute an extra dollar to the account, you will save 22 cents in taxes. This reduction can add up over the year, and this means you can save some money easily and efficiently.

Interested in finding out more? Try this book: J.K. Lasser’s 1001 Deductions & Tax Breaks 2025: Your Complete Guide to Everything Deductible

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