01.13.2026 By Amy Miller, AFC®

Maximize Your Tax Refund: Deductions and Credits You Should Know (2025 Edition)

A thoughtful tax plan can do more than get you through filing season; it can set the stage for saving successfully all year long.

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Tax Refund

Tax season is here again, and that means it’s time to make sure you’re taking advantage of every credit and deduction available to you. Whether you expect a refund or owe a little this year, understanding your options can help you keep more of your hard-earned money and use it to strengthen your financial future.

 

What’s New for the 2025 Tax Season

Each year, the IRS adjusts income thresholds, deduction amounts, and credit eligibility to account for inflation and new legislation. Here are a few key updates to know before you file:

  • Standard deduction increases: For 2025, it increases to $31,500 for married couples filing jointly, $15,750 for single filers, and $23,625 for heads of household.
  • Retirement contribution limits: You can contribute up to $23,500 to your 401(k), with an additional $7,500 catch-up contribution if you’re 50 or older. IRA contribution limits remain $7,000, with a $1,000 catch-up.
  • Child Tax Credit: This credit is worth up to $2,200 per qualifying child, with potential to earn more, depending on your income.
  • Earned Income Tax Credit (EITC): The maximum credit for 2025 is approximately $8,046 for families with three or more qualifying children.
  • Student loan interest deduction: You may be able to deduct up to $2,500 in interest paid on qualified student loans, depending on income. 

(Note: These figures reflect 2025 IRS adjustments. Always confirm with IRS.gov or a trusted tax preparer for the most accurate and up-to-date information.)

 

Common Deductions and Credits That Could Boost Your Refund

1. The Standard Deduction vs. Itemizing

Most taxpayers take the standard deduction, but if your qualified expenses, such as mortgage interest, charitable contributions, or medical expenses, are higher, it might make sense to itemize. Compare both options before filing.

 

2. The Earned Income Tax Credit (EITC)

If you work and earn a moderate or low income, the EITC could reduce the amount of tax you owe, or even give you a refund. The amount you receive depends on your income, filing status, and number of qualifying children.

 

3. The Child Tax Credit

Families with qualifying children under age 17 may be eligible for up to $2,200 per qualifying child, with part of it refundable. This credit helps offset the cost of raising children and can make a big difference at tax time.

 

4. Education Deductions and Credits

Students and parents can look into the American Opportunity Tax Credit (AOTC) and Lifetime Learning Credit (LLC). Both help offset education costs such as tuition, fees, and course materials. Be sure to check eligibility and income limits before claiming.

 

Use Your Refund to Build Financial Stability

Your tax refund can be more than just extra spending money; it’s a chance to strengthen your financial foundation. A few mindful money moves to make include:

  • Start or grow your emergency fund. Aim for at least $500 to cover small unexpected expenses.
  • Pay down high-interest debt. Reducing what you owe frees up more money for future savings.
  • Save for future goals. Whether it’s a down payment, college fund, or retirement, consider automatically depositing part of your refund into savings.

You can even split your refund into multiple accounts using IRS Form 8888, making it simple to send a portion directly into savings.

 

Protect Your Information During Tax Season

Tax time is also prime time for scams. Be cautious of unsolicited emails, phone calls, or texts claiming to be from the IRS. The IRS will never ask for personal or financial information via email or text message.

A few quick tips:

  • File electronically with a trusted preparer or certified software.
  • Use strong passwords and enable two-factor authentication.
  • Never share your personal information unless you initiated the contact.

You can also check out this episode of our podcast, Think Like A Saver, where we break down how to avoid tax time scams.

 

Take the America Saves Pledge

If you’re expecting a refund this year, now’s the perfect time to make a plan for how you’ll use it intentionally. Whether your goal is to build an emergency fund, pay down debt, or save for the future, America Saves is here to help you stay motivated and confident.

Take the America Saves Pledge and receive practical, encouraging tips and tools to keep you on track all year long.

 

Saving a portion of your refund is a powerful first step toward long-term financial confidence.

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