The Internal Revenue Service (IRS) has announced significant changes that may result in refunds of up to $10,000 for certain taxpayers in the 2026 tax season, corresponding to the 2025 tax year. The combination of the Earned Income Tax Credit (EITC) and its state version in California (CalEITC) increases the chances of receiving considerable tax relief, especially for low- or moderate-income workers.
In this sense, those who reside in California and meet certain criteria of income, age or family situation could notably increase their refund. In addition, the standard deductions and tax brackets have been updated, so that many taxpayers could pay less tax or even obtain additional sums in their returns. The key requirements and steps to follow are explained below.
Essential requirements to receive up to $10,000 in refunds from the IRS and CalEITC
To access the maximum amount, the first thing you need to know is the Earned Income Tax Credit (EITC). This federal benefit can reach up to $8,046 depending on the number of children and the level of income:
- No children: income up to $16,480.
- With one child: income up to $43,492.
- With three or more children: income up to $53,057.
It is mandatory to have a valid Social Security number before the filing deadline of April 18, 2025. Those who meet these requirements will be able to claim the EITC when they file their federal income tax return.
In the case of California, the CalEITC offers up to an additional $3,644. To be eligible, you must have resided in the state for at least six months, be between 18 and 65 years of age (or be responsible for a dependent child) and earn between $1 and $31,950 per year. Those who already meet the conditions for the EITC can also include the CalEITC and thus boost their refund to over $10,000.
Tax changes in 2025: new standard deductions and federal tax brackets
From the 2025 tax year, the IRS will apply inflation adjustments that will be visible in the 2026 tax season. Among the main changes are the standard deductions:
- $15,000 for single or married taxpayers filing separately (up $400 from 2024).
- $30,000 for married couples filing jointly (increase of $800).
- $22,500 for heads of household (increase of $600).
Furthermore, the tax rates continue to be in seven brackets, but the income limits have been raised. The highest bracket (37%) will apply to those earning over $626,350 (or $751,600 on joint returns), while the lowest bracket (10%) will cover incomes of up to $11,925 (or $23,850 for married couples).
Summary table of the new tax scales and their income thresholds in 2025:
| Tax Bracket | Single Filers | Married Couples Filing Jointly |
|---|---|---|
| 10% | Up to $11,925 | Up to $23,850 |
| 12% | $11,926 – $23,850 | $23,851 – $47,700 |
| 22% | $23,851 – $48,475 | $47,701 – $96,950 |
| 24% | $48,476 – $103,350 | $96,951 – $206,700 |
| 32% | $103,351 – $197,300 | $206,701 – $394,600 |
| 35% | $197,301 – $250,525 | $394,601 – $501,050 |
| 37% | Over $250,525 | Over $501,050 |
These adjustments are intended to prevent modest wage increases, linked only to inflation, from pushing taxpayers into higher brackets without a real increase in their purchasing power.
New figures for tax credits, benefits and special deductions in 2025
The EITC will reach a maximum of $8,046 for families with three or more children, while transportation and parking benefits will be deductible up to $325 per month. The standard deduction for health plans and flexible spending accounts (FSAs) will also increase, allowing for higher deductible contributions. As for inheritance tax, the basic exclusion will rise to $13,990,000, and exempt donations will rise to $19,000 per person.
On the other hand, the Adoption Credit goes up to $17,280 and, if you work outside the United States, the foreign income exclusion will be $130,000. The Alternative Minimum Tax (AMT) will also adjust its exemptions to $88,100 for singles and $137,000 for married couples. To keep up to date with other publications on economics, don’t hesitate to access the specialized section of this digital information website.
