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Understand the reasons behind the 29% drop in average tax refunds this year and find out why there’s no need to worry just yet. Get insights and tips to navigate this tax season.
Tax Season 2024: Why Your Tax Refund Might Be Lower This Year? (Photo: Google)
Early IRS Statistics for Tax Season 2024 Show 29% Decrease in Average Refunds
Early IRS data shows that this year’s average tax refund is approximately 29% smaller than the previous year’s. The average federal income-tax refund is $1,395, down significantly. This drop is due to many factors, therefore taxpayers should not worry.
One significant reason for the reduced average refund is the delayed start of the filing season compared to the previous year. With the filing season commencing on Jan. 29, which is a week later than the previous year, the IRS has processed fewer returns at this point, skewing the comparison of refund sizes. As more returns are processed, there is a strong possibility of an increase in the average refund amount for 2024.
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Insights into Tax Season 2024: Reasons Behind the 29% Drop in Average Refunds
Furthermore, certain tax credits, such as the earned-income tax credit and the refundable part of the child tax credit, have refunds withheld until at least Feb. 15 under the Protect Americans from Tax Hikes Act of 2015. This delay, aimed at preventing fraud, is another contributing factor to the lower average refund amounts released by the IRS.
It’s important to note that individual tax situations can vary, with changes such as the addition of a new family member or alterations in income potentially influencing the size of an individual’s return.
However, despite these considerations, tax season 2024 experts indicate that there are no major Federal law changes for the tax year 2023 that should significantly decrease refund averages. Additionally, certain provisions in the tax code, indexed for inflation, may lead to 5% to 10% higher average refunds after all 2024 returns are processed.
READ ALSO: 2024 Child Tax Credit In Minnesota: Understanding The Eligibility Criteria And Application Process
