The IRS has announced larger tax refunds this year compared to the previous year, potentially benefiting Americans who depend on their yearly refund for various financial needs such as debt repayment, emergency savings, or managing increased expenses. According to the IRS’s latest tax season update as of February 16, the average tax refund stands at $3,207, marking a 2.1% increase from the same period last year.
This rise in the average refund contrasts with the decrease experienced by taxpayers in 2023, where refunds were 3% lower due to the expiration of pandemic-related tax benefits. This decline compounded the financial challenges faced by households grappling with inflation, which has driven up the prices of essential goods and services.
Is there an increase in IRS tax refunds for 2024?
However, this year, some taxpayers are receiving larger refunds due to adjustments made by the IRS for inflation. The standard deduction and tax brackets for the 2023 tax year have been raised approximately 7%, influencing the refunds for taxpayers filing for that period.
Workers whose incomes did not keep pace with inflation last year are expected to receive even larger tax refunds, potentially up to 10% more, according to Mark Steber, the chief tax information officer at Jackson Hewitt.
For many taxpayers anticipating a refund this year, tax refunds typically constitute a significant annual financial boost. According to a recent Credit Karma poll, 4 in 10 taxpayers planning to receive a refund intend to use it for essential expenses.
According to the IRS, the typical tax refund is approximately 2.1% higher than last year’s. As of February 16, the average taxpayer has received around $3,207 from the tax agency, compared to $3,140 during the same period last year.
However, with seven weeks remaining in the current tax season, these figures may fluctuate until the IRS concludes its acceptance of tax returns on April 15. (Taxpayers can also request an automatic extension, extending the filing deadline until October 15.)
Thus far, approximately 34.7 million individuals have filed tax returns, a fraction of the 146 million individual tax returns expected by the IRS for this year.
Will My Tax Refund Increase in 2024?
Whether your tax refund will be bigger in 2024 depends on various factors specific to your situation, including your income and any life changes you may have experienced, such as welcoming a new child, purchasing a home, or getting married.
Certain taxpayers may find themselves owing more in 2024. For example, individuals who engaged in side gigs last year to mitigate the effects of inflation and did not pay quarterly self-employment taxes may face increased liabilities. Additionally, certain circumstances could reduce your refund, such as families with teenage children who are no longer eligible for the $2,000 child tax credit, as this credit applies only to children under the age of 17.
To estimate your potential refund for 2024, you can utilize a tax refund calculator, available from tax preparation companies like H&R Block and financial websites such as NerdWallet.
When Will I Receive My Tax Refund?
According to the IRS, most taxpayers who file electronically can expect to receive their refunds within 21 days. However, the IRS advises that certain returns may take longer to process, particularly those filed on paper forms.
To track the status of your refund, the IRS recommends visiting ‘Where’s My Refund?’ on IRS.gov or using the IRS2Go app.
Refund data is updated by the IRS overnight, and only once every 24 hours, so checking more frequently than daily is unnecessary, the agency notes. For electronic filers, the ‘Where’s My Refund’ tool typically displays your status within 24 hours of filing.
If you submit a paper return, the ‘Where’s My Refund’ site may take up to 4 weeks to reflect your status, according to the agency.