Check out the average tax refund that the IRS is providing you for 2024

The good news is that the average tax refund that the IRS is issuing to Americans is higher than it was a year ago. This is especially welcome news for those who are still feeling the pinch of inflation.

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According to the most recent IRS data, the average tax refund through February 23 is $3,213, which is 4% more than the average refund at the same period last year.

Last year, the expiration of pandemic benefits resulted in reduced tax returns for millions of households facing rising inflation, giving taxpayers a double blow. For example, according to IRS data, at this time last year, the average return was 11% less than in 2022.

The IRS’s modification of numerous tax rules for inflation is the reason for the increase in the average refund size in 2024. For the 2023 tax year, which taxpayers are currently filing for, the standard deduction and tax brackets were raised by 7%.

According to Mark Steber, chief tax information officer at Jackson Hewitt, who spoke with media earlier this year, employees whose income did not keep up with the high rate of inflation from the previous year are expected to receive larger tax refunds; some could receive as much as 10% more in 2024.

In a recent research note regarding this year’s tax refunds, lead U.S. economist Bernard Yaros of Oxford Economics stated that “strong inflation in 2022 led to significant inflation-linked tax code adjustments for tax year 2023, resulting in a more generous standard deduction, a larger maximum amount that filers can claim for the Earned Income Tax Credit (EITC), and even higher income thresholds where tax rates take effect — thereby subjecting more income to lower tax rates, all else equal.”

How Tax Refunds Are Used by Americans
According to a recent Bankrate research, over two-thirds of American consumers think they’ll get a tax return, which usually represents a household’s largest yearly cash inflow. However, many have serious plans for the cash injection rather than using their returns for indulgences; according to Bankrate, about half of them intend to use their checks to boost savings or pay off debt.

Taxpayers are still getting less than they did two years ago, when the increased child tax credit and other advantages from the epidemic helped boost the average refund. This is despite the fact that the average tax refund has increased so far this year. Nevertheless, according to IRS data, refunds overall are larger than they were over the same period in the tax season from 2018 to 2021.

Refunds of taxes also give a much-needed boost to the economy because many taxpayers use their checks to finance purchases of vehicles, house improvements, and other items.

“Across the various categories of retail sales, we find the clearest impact from refunds to be on general merchandise stores and used-car dealerships,” Yaros stated.

Of course, the tax season is still early; Americans have until April 15 to file their taxes, and in the next weeks, the amount of the average tax refund may vary.

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