IRS Tax Refund: Income Tax Return projected higher, key forms, deductions, tax credits - how to avail these

IRS Tax Refund is underway and the average refund last year was $3,167. This year, analysts have projected it could be $1,000 higher, thanks to changes in tax law. More than 165 million individual income tax returns were processed last year, with 94 per cent submitted electronically. IRS Tax Refund key forms are - W-2 forms, if you are employed, 1099-G forms, if you are unemployed, and 1099 forms, if you are self-employed.

This year, due to the Republican tax and spending bill that President Donald Trump signed over the summer, there are new deductions taxpayers should know about.

Among them are no tax on tips, no tax on overtime, deductions for car loan interest, and deductions for people who were 65 or older by December 31.

Standard Deduction

The standard deduction for single taxpayers is $15,750 for this year. For married couples filing jointly, it has increased to $31,500. For heads of households, the standard deduction is $23,625.

State and Local Taxes (SALT) Deduction

The deduction cap on state and local taxes has increased from $10,000 to $40,000. The change is also known as the Working Families Tax Cut and was enacted in July 2025.

The maximum annual deduction is capped at $2,500. The deduction phases out for taxpayers with modified adjusted gross income over $150,000, or $300,000 for joint filers. The tax deduction is also limited to specific industries where tipping is common practice. Some of the included industries are bartenders, food servers, musicians and housekeeping cleaners.

To claim the new tax break, you will need to fill out a new tax form called Schedule 1-A.

Additional Schedule 1-A Deductions

Schedule 1-A is an IRS form used to claim and calculate four tax deductions originating from the tax and spending bill. They are the change in state and local tax deduction, deduction on qualified tips, and car loan and senior deductions.

Currently, the tax credit is $2,200 per child but only $1,700 is refundable. This refund is called the Additional Child Tax Credit. To claim the Additional Child Tax Credit, you must have at least $2,500 of income for the tax year.

You qualify for the full amount of the Child Tax Credit for each qualifying child if you meet all eligibility factors and your annual income is not more than $200,000 ($400,000 if filing a joint return). Parents and guardians with higher incomes may be eligible to claim a partial credit.