Ways to Get a Bigger Tax Refund

James Klaffer is a senior director of high-net-worth tax planning at Northwestern Mutual.

As the saying goes, nothing in life is certain but death and taxes. Although paying taxes is an unavoidable part of life, there is a silver lining: It’s often possible to get back some of what you’ve paid when you file your tax return each year. But maximizing your refund requires some know-how.

Read on to learn more about how tax returns work and tips that could help you get a bigger refund so you can keep more money in your pocket to put toward your financial goals. We’ll also discuss whether getting a big refund is really all it’s cracked up to be or if there might be a better target you can aim for in future years.

How do tax returns work?

When you file your tax return, you’re essentially providing the IRS with the information to determine your tax liability for the year. This includes details about your income, interest or capital gains you may have earned, any deductions or credits you’re claiming, your filing status, etc.

Once the Internal Revenue Service (IRS) receives your tax return, it cross checks the information that you’ve provided against information filed by other parties like your employer and bank. After verifying that your tax return is correct, it then uses this information to determine how much taxable income you have for the year, which tax bracket you fall under and, ultimately, your total tax bill.

If your tax return shows that you’ve overpaid your taxes throughout the year—for example, because you withheld more from your paychecks than what you owe—you’ll get a tax refund. If it shows that you underpaid throughout the year, you’ll end up owing money.

What determines how big your tax return is?

The size of your tax return is determined by two factors:

• Your total tax liability for the year, which is calculated based on your income, deductions, etc.
• How much you’ve already paid in taxes throughout the year in withholdings and estimated payments.

You can influence the size of your tax return by adjusting either side of that equation. To minimize what you owe in taxes and increase the likelihood of getting a bigger refund, you’ll need to find ways to reduce your taxable income. This is the part of your income that you’re required to pay taxes on. The good news: By having a clear understanding of tax regulations and working with a professional, there are many ways you can do this.

How to maximize your tax refund

Here are some actions you can take that can help you get the most back on taxes:

1. Consider itemizing your deductions

Deductions are expenses you’re able to subtract from your taxable income, reducing the amount you’ll owe in taxes. What you’re able to deduct and how much depends on many factors, like your filing status and other qualifying expenses. Each tax year, you can decide to either take the standard deduction or itemize your deductions.

The standard deduction is the baseline tax deduction that all taxpayers are entitled to if they choose to forego itemization. The One Big Beautiful Bill Act (OBBA), passed in 2025, increased the standard deduction for the 2025 tax year to account for inflation. In 2025, the standard deduction is $15,750 for single filers and $31,500 for those who are married filing jointly; for the 2026 tax year, these jump to $16,100 and $32,200, respectively.

Approximately 90 percent of American taxpayers opt for the standard deduction. That’s partly because claiming the standard deduction is easier than itemizing. In addition, the Tax Cut and Jobs Act (TCJA) of 2017 dramatically increased the size of the standard deduction; this made it the more beneficial choice for the majority of filers. Previously, it’s estimated that about 70 percent of filers claimed it versus itemizing.

But, if you have a lot of eligible expenses, you may be better off itemizing instead of claiming the standard deduction. To decide which is right for you, add up your eligible expenses and compare it against the standard deduction. If itemizing results in a higher amount, that’s most likely the route that you should take.

2. Contribute to tax-advantaged accounts

Another way to lower your taxable income for the year is to contribute to one or multiple tax-advantaged accounts. These are special types of accounts designed to incentivize saving and investing for certain financial goals—such as retirement.

Tax incentives offered by these accounts can take multiple forms. For example, contributions you make to a traditional 401(k), plus any employer match, aren’t included in your taxable income for the year. Instead, these taxes are deferred until you withdraw the money in retirement. And with an IRA, you may be eligible to deduct the amount you contributed to your IRA that year from your taxable income—as long as you don’t exceed the income limits.

Though different types of accounts come with different benefits, contributing to a tax-advantaged account will generally help reduce your taxes in a given year.

Examples of tax-advantaged accounts that you might consider contributing to include:

1. Retirement accounts: When you contribute to a traditional retirement account—such as a 401(k), 403(b)or IRA—you’re making pre-tax contributions that reduce your taxable income. (Contributions to Roth accounts are made after taxes and don’t lower your taxable income in the current year but offer their own benefits.)
2. Health savings accounts (HSAs): Contributions to an HSA, used to cover qualified medical expenses[1] , are made with pre-tax funds and therefore will lower your taxable income for the year.
3. 529 college savings plans: Contributions to 529 plans are made with after-tax funds, so they won’t lower your federal income. But depending on your state (and the plan you’re contributing to) these contributions may lower your taxable income on your state tax filing.

3. Ensure you're claiming the right credits

A tax credit is a dollar-for-dollar reduction in the amount of taxes that you owe the IRS. This makes them even more valuable than tax deductions, which simply reduce your taxable income for the year.

Consider, for example, a single filer who falls in the 22 percent tax bracket for the year and owes the IRS $5,000. If that single filer received a $1,000 tax deduction, it would translate into savings of $220, lowering their tax bill to $4,780. If the same filer received a $1,000 tax credit instead, their tax bill would be lowered dollar-for-dollar down to $4,000.

Can you claim a tax credit even if you don’t owe the IRS any money for the year? That will depend on whether the credit is refundable or non-refundable. Refundable tax credits, while rare, don’t just lower your tax bill—they can boost your refund. Here’s an example: A taxpayer owing $500 in taxes for the year, but who receives a $1,000 refundable tax credit won’t just knock their bill down to $0; they’ll also increase their refund by $500.

There are many credits, refundable and non-refundable, that you may be entitled to. Here are some of the more common tax credits you should be aware of:

1. If you earned a low income: The Earned Income Tax Credit
2. If you contributed to retirement savings: The Retirement Savings Contributions Credit (Saver’s Credit)
3. If you’re a parent: The Child Tax Credit, Adoption Credit and Child and Dependent Care Credit
4. If you or your dependents were in college: The American Opportunity Tax Credit and Lifetime Learning Credit
5. If you invested in clean energy: The Residential Clean Energy Credit and New Clean Vehicle Tax Credit

4. Adjust your filing status

Your tax filing status will directly affect your standard deduction. It will also affect which tax bracket you fall under and which tax credits you’re eligible to claim.

A single filer, for example, will qualify for a much lower standard deduction compared to someone filing as a head of household. A single tax filer also will fall into a higher tax bracket even when making less money. Married couples can decide if they’re better off filing jointly or separately, depending on their incomes and other factors.

It’s important to regularly revisit your tax filing status as your personal situation changes. Life changes—for example, getting married or divorced, having children or purchasing a home—can impact what filing status will be most tax efficient in that year.

Is it better to owe taxes or get a refund?

If your tax planning approach is aimed at getting as large a refund check back from Uncle Sam as possible, you're not alone. In 2025, an estimated 90.2 million taxpayers received a refund, with an average direct deposit refund of $3,023, according to the IRS.

But most financial experts agree that getting back a large refund isn't really something that individuals should be aiming for.

Sure, it's better than owing money to the IRS. But the best-case scenario would actually be to fine-tune your withholdings so that you’re having the right amount of taxes taken out of each paycheck. When tax season comes around, this means you may not be getting a refund—but you won't owe money, either.

When you get a tax refund, it essentially means that you loaned that money to the government. Had you not overpaid, you would’ve had more of that money to use throughout the year. That means more opportunity to put your money to work for you—growing through investments, paying off expensive debt or building an emergency fund.

The benefit of using financial professionals to help you tax plan

Nobody wants to pay more in taxes than they have to. By thinking carefully about your deductions, credits, filing status and taxable accounts, it's possible to boost your refund so you're keeping more money where it can serve you best—in your accounts.

But navigating the tax code isn’t always as simple as it may sound. If you’re unclear about the tax-advantaged accounts you should be contributing to or the tax credits you may be entitled to, your Northwestern Mutual financial advisor can help. They can show you how different approaches can affect your larger financial plan. And if you do have a refund coming your way, your Northwestern Mutual advisor can help you decide how to use it. They have access to a network of experts in your area and can connect you with a tax professional, too.

This publication is not intended as legal or tax advice. Financial Representatives do not render tax advice. Consult with a tax professional for tax advice that is specific to your situation.