As tax season unfolds, the Internal Revenue Service (IRS) reveals a significant 29% decrease in the average tax refund 2024 compared to the previous year, marking a notable shift in taxpayers’ expectations.
Average Tax Refund 2024: IRS Reports 29% Decrease in Average Refunds (Photo from: inkl)
Factors Influencing Average Refunds
The average tax refund for 2024 stands at $1,395, down from $1,963 in the preceding year, indicating a substantial decline in refund amounts. The IRS cautions that these figures are preliminary and subject to change due to several factors affecting the tax filing season.
Taxpayers should note that the comparison of refund sizes might be distorted due to the shorter time frame of data collection this year. The 2024 tax season commenced later than the previous year, potentially impacting the average refund amounts reported by the IRS. To discourage fraudulent claims, the 2015 Protect Americans from Tax Hikes Act freezes credit disbursements until Feb. 15.
Pending tax legislation, including proposed bills in Congress that could affect tax credits like the child tax credit, adds uncertainty to refund amounts for eligible filers. Changes in personal tax situations, such as marital status changes or alterations in income sources, also impact individual refund amounts.
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Prospects for Increased Refunds
Despite the initial decline in average tax refund 2024 amounts, tax professionals reassure taxpayers that these figures are subject to change as the filing season progresses. With inflation adjustments in the tax code for 2023 anticipated, taxpayers may see higher refund amounts, especially those whose income did not keep pace with inflation rates.
Furthermore, experts anticipate inflation-indexed provisions such as the standard deduction and income ranges for tax brackets to increase by 7% in 2023, potentially resulting in higher refunds for eligible taxpayers whose income growth lagged behind inflation rates.
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