Tuesday is April 15, when income taxes are due for American taxpayers. Some take it in stride, in the spirit of early 20th century U.S. Supreme Court Justice Oliver Wendel Holmes, Jr., who famously quipped that “taxes are the price we pay for a civilized society.” Others grumble at the burden of cutting a hefty check for Uncle Sam to waste on God knows what.
But for many, filing clears the way for getting a pretty fat check back from the feds in the form of a refund. What?
OK, it’s not like Uncle Sam is just doling out federal dollars to anyone. Those who get a refund paid more than the tax code says they owed — often invisibly in the form of paycheck tax withholding — and so the government is just returning the overpayment. Many financial and tax advisers urge clients to avoid it by increasing their tax withholding.
“A lot of people get excited when they receive a refund, but all that means is they overpaid their taxes throughout the year and are now getting their own money back, the money the government’s been holding on to,” said David Kline, vice president of communications and research for the California Taxpayers Association, a nonprofit tax research and advocacy group.
But hey, even if you did lose out on some interest you could have earned on the money, a refund’s like getting a little present in the mail. Nieka Bright, 41, a consultant from Oakland, said she increased her withholding so she wouldn’t end up with an April tax bill, and is expecting to get a refund this year of about $1,500, her first in “quite a while.”
“Refunds are always better than paying back the government for something that could have come out earlier in the year,” Bright said.
That may be why almost three out of four filers nationally overpay Uncle Sam and collect a refund the following spring, according to 2022 IRS data, the most recent year available, crunched by Upgraded Points, a travel and financial research company. The average refund among U.S. filers was nearly $3,300 annually.
The California average refund is close to that national figure, $3,344, 11th highest among the states, Upgraded Points data showed. Leading the states are Florida ($3,852), Texas ($3,774) and Wyoming ($3,720).
Among California’s 58 counties, seven of the 10 with the highest average federal tax refunds are in the Bay Area, the data showed. Leading them all by a wide margin is Marin, at $6,168, highest in the state and 6th highest among counties across the country. Teton County, Wyoming, had by far the highest average refund among U.S. counties: $13,168.
Other Bay Area counties in the top 10 statewide were San Mateo ($4,828), Santa Clara ($4,404), San Francisco ($4,273), Contra Costa ($3,940), Alameda ($3,584) and Napa ($3,524). The share of Bay Area filers receiving refunds ranges from 46% in Marin County to 66% in Solano County, and percentages have been decreasing in recent years.
Michael Stromberg, chief technology officer and lead data analyst at California-based Lattice Publishing, which partners with Upgraded Points to design and execute data studies, said that the average refund amount is higher in more affluent counties because with higher earners, even a small discrepancy in their withholdings can lead to a large refund.
“That trend definitely holds in the Bay Area and may even be more pronounced here because of the region’s wealth,” Stromberg said.
Stromberg said that in recent years, the national share of income tax returns that were overpaid and due either a refund check or future tax credit has been dropping, from 77% in 2017 to 70% in 2022.
California is one of 42 states that assess their own income taxes, which also are due April 15. As with federal income taxes, those who overpay will receive a refund check, but the amounts will differ due to the different state-level tax rates and codes.
California’s top level 13.3% income tax rate is the highest in the country, tax experts say, but they noted that rates for lower income brackets are lower.
“California has extremely high tax rates on high earners, but for lower- and middle-income earners, the rates aren’t particularly high,” said Jared Walczak, vice president of state projects at the Tax Foundation, a nonprofit research organization in Washington, D.C. “So in that sense, California can actually be competitive for those income brackets compared to other states. But as incomes rise, the tax burden becomes much heavier.”
Kline added that California’s top 5% of income earners pay about 62% of all the state’s personal income tax revenue.
“So we’re heavily reliant on high-income earners staying here and paying taxes,” Kline said.
Income tax is California’s single largest source of state revenue, 41%, far more than sales tax (17.25%) and corporate taxes (14.77%), making the state budget vulnerable to market swings that affect high earners’ incomes. The programs receiving the largest share of state tax revenue are health and human services (38%), K-12 education (27.35%) and higher education (8%).
The biggest recipients of federal spending are Social Security income for older people (22%), debt payments (14%), health programs (13%), Medicare health coverage for older people (13%) and national defense (13%).
President Trump and his fellow Republicans who control Congress have pledged to extend the Tax Cuts and Jobs Act that he signed in 2017 and is set to expire at the end of the year. Should that not happen, taxpayers next year may find themselves owing more and seeing smaller refunds.
“There’s a lot in flux right now that could impact taxpayers in California and across the country at the federal level,” Walczak said.
Originally Published: April 14, 2025 at 2:33 PM PDT