Early IRS data reveals a significant changes in average tax refunds resulting to smaller tax refunds this year compared to the same period last year, sparking concerns among taxpayers awaiting their refunds. With an average refund check of $1,395 as of February 2nd, down 29% from last year’s $1,963, individuals are bracing for financial adjustments.
Impact of Smaller Tax Refunds This Year
The smaller tax refunds this year raises concerns for millions relying on tax refunds for essential expenses, savings, and debt payments, especially amidst ongoing inflation challenges.
Delays in refund processing due to tax credits like the earned income tax credit or child tax credit contribute to the distorted refund picture, impacting individuals’ financial planning.
Taxpayers typically expect refunds if they overpaid taxes the previous year, with nearly three-quarters of filers receiving refunds in 2023.
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Potential for Bigger Refunds in 2024
Tax experts anticipate potential increases of up to 10% in refunds for some individuals in 2024, offering hope amid economic uncertainty.
The IRS’s annual adjustments to federal income tax brackets and deductions aim to address inflation impacts, potentially resulting in larger refunds for taxpayers.