So far this year, the Internal Revenue Service has refunded approximately $172 billion to taxpayers — $16.4 billion less than in 2022. On an individual level, average refund checks have been for $2,903. This is also down from last year by about $360, or 11%.
If you have worked with the same employer over the past couple of years and collect W-2 income, your tax refund could be smaller this year than in years past.
The main reason that tax refund checks are smaller this year is because several pandemic-era federal payment programs have come to an end. These include the child-related tax and credit program.
Tax refund checks can provide a windfall of cash for families, which can be a major help in boosting savings or paying down debt. This is especially true right now, with record inflation persisting over the better part of the past year.
According to a survey by Bankrate, 75% of taxpayers said this year’s refund would be important to their financial health, compared to 67% last year.
However, it could be helpful to remember that your tax refund is ultimately the government giving you back money you’ve already spent. If you get a large refund, it simply means you paid too much income tax the previous year.
Instead of banking on a large check in April, consider adjusting your tax withholding amounts with your employer. Doing so will reduce the percentage of your paycheck that your employer puts aside for taxes, putting the money in your pocket sooner rather than later.
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