Americans’ Tax Refunds Are 14 Percent Smaller This Year, Latest IRS Data Show

The Internal Revenue Service building in Washington, on Jan. 28, 2019. Saul Loeb/AFP via Getty Images

The latest IRS update on tax filing data shows that Americans’ tax refunds so far this year are considerably smaller than they were last year, something that both tax experts and the agency itself predicted.

As of Feb. 10, the average refund amount stood at $1,997, the latest IRS data show. That’s 14 percent lower than the average refund amount a year ago, which stood at $2,323.

Tax pros and the IRS itself warned Americans to expect smaller refunds this year.

“Differences should be easily explained by special rules that expired,” CPA Robert Persichitte of DeLAGify Financial told Forbes.

“One big reason for many is that much of the pandemic related relief programs for families and individuals are no longer available,” H&R Block explained in a blog post.

The IRS said in a note late January that tax law changes including the elimination of the Advance Child Tax Credit and no Recovery Rebate Credit this year to claim pandemic stimulus payments means that “many taxpayers may find their refunds somewhat lower this year.”

A prior IRS update showed that tax refunds were nearly 11 percent lower as of Feb. 3, with that figure climbing by around three percentage points in the span of a week or so.

More Refunds, More Money

The IRS’s updated filing statistics also show that more refunds have been given out this year compared to the last by a large margin.

The total number of refunds as of Feb. 10 was 13.3 million. That’s over 48 percent higher than the 9.0 million at the same time in 2022.

Not only are there more refunds this year, but the total amount refunded is also greater. So far in 2023, the IRS has refunded a total of $26.6 billion, or nearly 28 percent more than at the same time last year. As of Feb. 11, 2022, the total amount refunded stood at $20.9 billion.

Also considerably higher in 2023 so far is the total number of direct deposit refunds and the total amount refunded via direct deposit.

Specifically, the IRS has made 12.2 million direct deposit refunds as of Feb. 10, 2023. That’s 34.8 percent greater than the 9.0 million around the same time last year.

In terms of dollar amounts refunded via direct deposit, so far this year that figure stands at $25.4 billion. That’s 17.1 percent higher than the $21.7 billion around the same time in 2022.

The IRS recently urged taxpayers to file electronically and choose direct deposit to get their refund.

“Direct deposit is the safest and most convenient way to receive a tax refund,” the agency said in a Jan. 26 notice. “Taxpayers who file a paper return can also choose direct deposit, but it will take longer to process the return and get a refund.”

But just like the overall refund is lower this year compared to the last, so is the average direct deposit refund amount. As of Feb. 10, the average direct deposit refund amount stood at $2,056. That’s nearly 11 percent lower than the $2,306 direct deposit, on average, around the same time last year.

Why Lower Refunds?

The IRS has noted that for 2022’s filing season, the increased Child Tax Credit (CTC), Earned Income Tax Credit (EITC), and Child and Dependent Care Credit applied. However, those credit amounts have gone back to the pre-pandemic amounts.

The CTC for 2022 tax returns has been reduced to $2,000 per child. That’s down from the expanded amount of $3,600 for children younger than 6 and $3,000 for children between 6 and 17 in 2021.

Some taxpayers may be eligible for an Additional Child Tax Credit, which would allow them to receive up to $1,500 of the CTC as a refund on their tax return.

Also, a tax credit that working parents can use to help cover child care costs or that people with adult dependents can use for that purpose is lower in 2022.

Further, the Recovery Rebate Credit was a way for millions of Americans to get pandemic support if they didn’t receive their full amount via stimulus checks. This credit was available for missing amounts from the first-, second-, and third-round stimulus checks and could only be claimed on 2020 and 2021 tax returns.

The stimulus checks were discontinued in December 2021 and the missing third-round amounts could only be claimed on a 2021 tax return filed in 2022.

However, people who may have missed the opportunity to claim missing third-round stimulus payments can review their 2021 tax return and consider filing an amended return.

According to the IRS, taxpayers can expect to receive their 2022 tax refund within about 21 days of submitting their return if they file electronically.

People applying for the Earned Income Tax Credit or Additional Child Tax Credit will likely have to wait longer, the IRS says.

Jack Phillips contributed to this report.