As tax season rolls in, early reports indicate that taxpayers are seeing much lower refunds than they did last year.
The average refund so far this season is about 32% lower than the same time last year, with the current average standing at $2,169 as of February 14.
For comparison, at the same point in the 2024 tax season, the average refund was $3,207.
Why Are Refunds Lower This Year?
While the lower average refund is concerning for many, the IRS suggests that these numbers could balance out as more returns are processed.
One of the key reasons for the dip is that the current data doesn’t include refunds tied to earned income tax credits or additional child tax credits, which don’t get issued until mid-February.
Last year’s early data, however, included these credits, which often result in higher refunds, sometimes even in the five-figure range.
As these credits require additional processing time due to identity verification under the Protecting Americans from Tax Hikes Act (PATH), the IRS advises against relying on specific dates for refunds, especially when planning large purchases or bill payments.
What’s the Timeline for Tax Refunds This Year?
The IRS has stated that those waiting for refunds tied to these credits should expect to see them in their accounts by March 3 at the earliest, though holidays and weekends can further delay the process.
For most taxpayers who don’t claim these credits and file their returns electronically, refunds are typically issued in under 21 days.
Key Changes to Watch Out for in 2024 Tax Filings
While the filing process remains largely the same as in previous years, there are some important changes for this tax season.
If you sold items online or purchased an electric vehicle in the past year, you might face new issues that could affect your return.
Additionally, more Americans are now eligible to file their taxes for free thanks to an expansion of the IRS’s Direct File program.
Tax Deadlines and Special Extensions
For most taxpayers, the deadline to file 2024 returns is April 15.
However, residents in Los Angeles County and other areas impacted by recent wildfires are receiving an extension until October 15 as part of disaster tax relief measures.
In total, the IRS expects to receive over 140 million individual returns this year.
Potential Impact of Federal Job Cuts on the IRS
As the Department of Government Efficiency (DOGE) continues to reduce the number of federal employees, it remains uncertain how these cuts will affect the IRS’s ability to handle the ongoing tax season.
The full scope of any potential service delays or reductions in staffing is still to be determined.
What’s Next for Taxpayers
If you’re planning to file soon, it’s important to keep these changes in mind and be aware of potential delays.
The IRS is processing millions of returns and will continue to manage the flow as the April 15 deadline approaches.
Keep an eye out for any updates from the IRS and be sure to check your refund status if you’re expecting one.