Tax season in 2024 brings early statistics on the average tax refund, indicating a nearly 29% decrease compared to the previous year. While this might initially cause concern among taxpayers, a closer look reveals reasons for reassurance.
IRS Statistics on Average Tax Refund 2024
The IRS‘s latest data shows that, on average, tax refunds for 2024 are $1,395, marking a significant drop from the previous year’s figures. However, several factors contribute to this apparent decline, mitigating the immediate alarm.
Firstly, the IRS began processing returns later this year than the previous year. This delayed start means that fewer returns have been processed so far, skewing the comparison of refund sizes. With only 15.3 million returns received thus far, a 19% decrease from last year, it’s anticipated that the average refund size will likely increase as more returns are processed.
Additionally, specific regulatory provisions delay the release of refunds until at least February 15, particularly for returns claiming the earned-income tax credit or the refundable part of the child tax credit. This measure prevents fraudulent claims and affects the average refund size reported.
Factors Influencing Individual Refunds
Taxpayers’ circumstances also play a significant role in average tax refund amounts, with changes such as new dependents, marital status changes, or alterations in income impacting returns. However, there have been no federal law changes for the tax year 2023 that should substantially lower refund averages compared to the previous year.
Despite the initial figures, experts anticipate that once all returns are processed and adjustments are factored in, average refunds for 2024 might be 5% to 10% higher than initially reported. Factors such as inflation-indexed adjustments to tax provisions could contribute to this upward trend.