To date this tax season, the IRS has issued approximately $158 billion in refunds. But what is the average American family getting back?
According to a new report from the federal tax agency, about 54 million households have gotten tax refunds so far in 2023. The average refund, however, is not as high as it has been in past years.
At this point last year, the average tax refund was $3,305. Now, taxpayers are getting back several hundred dollars less at an average of $2,933. It is worth noting that the average refund amount could change by 2023's April 18 tax filing deadline.
Furthermore, it should not come as a shock that refunds this year are lower than they have previously been.
In December 2022, the IRS urged American families to prepare for the possibility of smaller refunds. At the time, federal authorities shared several reasons for this.
For example, those who opt to take the recently-increased standard deduction, as opposed to itemizing, are no longer allowed to deduct their charitable contributions.
Additionally, the American Rescue Plan Act of 2021 lowered the reporting threshold for third-party sellers on online marketplaces like eBay, Mercari, Poshmark, and more. The controversial move requires sellers to pay taxes on any income over $600. This is a major decrease from the previous threshold of $20,000.
Regardless of lower refunds, the IRS began using its $80 billion funding boon to begin improving taxpayer services this year, including technology upgrades.
In an official release about the agency's five-year improvement plan ,IRS Commissioner Chuck Rettig said:
“ "Through the Strategic Plan, we want to share our priorities and how they shape the important work that takes place at the IRS, year in and year out, to help taxpayers," said . "We serve and interact with more Americans than nearly any other public or private organization. The IRS has undergone tremendous change over the last five years, and we continue to evolve to better serve the nation's taxpayers." ”
What do you think about this year's average tax refund amount?
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