Early Tax Refunds Are Bigger This Year. Here’s Why
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Tax season can be a confusing and overwhelming time, but it brings the hope that you'll get a sizable tax refund for your efforts. The good news is that so far, taxpayers who are filing early are getting bigger refunds, on average, compared to last year.
New IRS data shows that a few weeks into tax season, the average filer is receiving a tax refund amount of $3,213 — an increase of over $100 compared to this time last year. It appears as if the bigger refunds come as a result of tax bracket changes implemented after the 2023 filing season.
The average tax refund is bigger so far this year
Per the IRS, almost 44.6 million taxpayers have submitted their tax returns so far in 2024. Of those, almost 29 million filers have received a refund. The IRS has refunded a total of about $93 billion already this tax season, and the average tax refund comes in at $3,213 — a $134 increase over 2023's average refund of $3,079 at this time last year.
The reason for the increase this year has much to do with the IRS's annually-adjusted tax brackets and standard deduction. Because of the rampant inflation last year, the agency increased its standard deduction by over 7% to $13,850 for single-filers. This historically-high single-year increase allows filers to reduce their taxable income fairly significantly compared to last year. Moreover, those on the low end of their tax bracket last year may have dropped into a lower-paying bracket due to the standard deduction increase, especially if their change in income did not keep pace with inflation.
There are other factors at play that could mean even more money in filers' refunds this year. One reason refunds in 2023 came in lower than years prior was due to the fact that many pandemic-era tax credits had worn off. However, some other credits and changes are taking place this year, like the new $7,500 EV tax credit for qualifying electric vehicle owners. Similarly, policymakers in the House of Representatives voted to re-expand the Child Tax Credit once again. If it passes through Congress completely, there is a possibility that families will be able to reap extra money back per child as soon as this tax season.
Other small improvements to the filing process by the IRS don't necessarily mean a higher refund, but they might help you save. The agency expanded eligibility for its IRS Free File program, allowing those who earn under $79,000 the opportunity to file their taxes free of charge. Those who live in one of 12 pilot states and make an income of less than $200,000 as a single-filer can use the IRS's new Direct File tool, too, as a free alternative to tax prep software companies.
If you've already filed your taxes, and you're waiting to receive your refund, you can keep track of it with the IRS's improved Where's My Refund? tool. The IRS has upgraded Where's My Refund? with more detailed status messages, allowing you to have a better idea of how long it will take for your refund to reach you.
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