Early IRS data shows that the average tax refund this year is 29% lower.
IRS data shows that tax refunds this year have been noticeably lower than last year.
As of February 2, the average refund check for this year has been $1,395. This is about 29% less than the average $1,963 recorded last year. This is based upon nearly 2.6 million tax refunds worth approximately $3.65 billion.
The IRS warns that the average refund amount may change over the next few months, as more returns will be processed.
Americans who are expecting to receive the earned-income tax credit, the tax break for low to moderate-income workers, or child tax credits cannot legally get their refunds before mid-February. This could also distort the picture.
Millions of Americans rely on Uncle Sam’s money to pay for major purchases, to save for retirement, or to pay off debt. Millions of taxpayers still struggle with high inflation which has sent prices of necessities like rent and food soaring.
Taxpayers receive a refund when they overpaid taxes in the past year and had too much withheld. The money can be significant for many families. In 2023, nearly three-quarters of taxpayers received a refund, averaging $3,176. This is down about 3% compared to the previous year.
Tax experts predict that refunds in 2024 could be much larger. Some people may receive up to 10% higher than last year. This would be a $300-$400 increase.
Mark Steber told FOX Business that anyone whose income has not kept up with inflation should be doing better. It’s not a marketing ploy or voodoo, but it’s a science.
Larry Kudlow breaks down tax and economic policy on ‘Kudlow.’ Says the lower taxes have always boosted economic growth.
The larger refunds are the silver lining to last year’s inflation crisis, which devastated millions of household finances.
The IRS adjusts federal income tax brackets and the standard deduction every year. The increases are even more impactful and significant in times of high inflation. The tax brackets will shift higher in 2023 by 7.1%. This is a historical increase, which is higher than the 5.5% increase in earnings that the median worker received last year.
Most taxpayers have until Monday, April 15 to file their tax returns or request a deadline extension.
By the deadline for this year, the IRS expects more than 128.7 million individual tax returns to be received.
The IRS warns filers that to receive a refund in 21 days, they must file electronically, make sure they are complete and accurate, and ask for the refund by direct deposit.
The tax collection agency has warned that some returns will require an “additional” review and may take longer to process if the system identifies any errors or mistakes, or if the agency suspects fraud or theft.
Eric Bronnenkant told FOX Business that once you are reasonably certain you have all your tax documents in order, you should file your return as soon as possible so you can begin investing your money. Because, in most cases, the IRS does not pay interest on refunds. “Getting that money into your hands earlier is better.”
