Curious about tax strategies? Here’s the average tax refund

If you overpay the IRS in taxes during the year, they will usually return your money in the form of a tax refund. The IRS refunds billions of dollars to taxpayers every year.

For the 2025 tax filing season, the IRS has refunded more than $311 billion to taxpayers as of October 17. The average refund was $3,052.

While getting a lump sum of money from the IRS after filing your taxes may seem like a pleasant surprise, it’s actually better to avoid paying excess taxes, because you’re providing the federal government with an interest-free loan.

So, if you want to keep more money in your wallet and give less to Uncle Sam, here are three tax-saving tips.

Contribute to tax-advantaged accounts

Contributions to a traditional 401(k) and some types of contributions to individual retirement accounts (IRAs) are tax deductible the year you make them.

Let’s say you contribute $50 of all your paycheck to your 401(k) over the course of the year. Your employer deducts this money from your paycheck before calculating the withholding tax on the balance. You saved $2,600 in your golden years, and every dollar of those dollars was tax-free… for now.

However, you are will You must pay taxes on this money when you start withdrawing it in retirement. These rules apply to traditional retirement accounts though.

Roth accounts are different though. With Roth accounts, you’ll pay taxes on your contributions made but you won’t have to pay taxes when you make withdrawals in retirement.

Depending on your income and whether you have a workplace retirement plan, you may be able to deduct Traditional IRA contributions from your income.

Reducing your income may pull you into a lower income tax bracket, so you can pay a lower marginal tax rate on your income.

Another way to reduce your taxable income is to contribute to your health savings account (HSA). With HSAs, your contributions are tax-deductible, money can grow tax-free, and withdrawals are tax-free when used for qualified medical expenses. However, you must be enrolled in a high-deductible health plan to qualify.

Find out if you qualify for any tax credits

The tax credit is deducted from the amount you owe the IRS when you complete your tax return. Let’s say you owe $2,000, and then you realize you’re eligible to claim a balance of $1,000. Now you only owe $1,000.

The IRS offers many tax breaks.

You may be eligible for the child tax credit if you have a child who is under 17 at the end of the tax year. It’s worth $2,200 for each qualifying child in 2025, and there’s a refundable portion of $1,700 if your tax bill reaches zero before you use the credit.

Another tax credit to take advantage of is the American Opportunity Tax Credit, which can be used to save money on higher education expenses. The cost of the AOTC is $2,500 per eligible student, with a refundable portion of up to $1,000.

Choose wisely between taking the standard or itemized deduction

Tax deductions are deducted from your income to reduce your taxable income when preparing your tax return.

You have two options here: You can claim the standard deduction for your filing status, or you can itemize by adding up all of your tax-deductible expenses for the year. Both are subtracted directly from your taxable income when you file your return, but you can’t claim the standard and itemized deduction, so it makes sense to claim only the higher amount.

The standard deduction for 2025 for single filers is $15,000 and $30,000 for married taxpayers filing jointly.

If you choose to itemize on the other hand, you can deduct expenses such as state income or property taxes, mortgage interest, some medical expenses, and more.

Certain types of workers, such as those who receive a portion of their income as tips and those who receive overtime pay, may benefit from a recent federal tax law, known as the Big Beautiful Bill, passed earlier this year.

“Legislation was passed on July 4 eliminating taxes on some tips and some overtime,” says Allison M. Eddings, a certified public accountant with Top Dog Tax & Accounting. “But the amount that will be excluded from tax will not be listed separately on your W-2. It will be up to you to figure that out. Additionally, no overtime tax does not mean that the entire overtime pay of $22.50 an hour (based on a $15 rate) is excluded from tax. Only the excess is excluded, so the $7.50 increase in income will be excluded, and you have to track that carefully.”