Online tools can help determine how big your refund might be this year or how much money you owe the IRS. (iStock)
Tax refunds for some taxpayers may be bigger in 2024 thanks to the inflation adjustments the Internal Revenue Service made to tax brackets implemented in 2023, along with increased standard deductions.
Each year, the IRS adjusts income tax brackets according to a formula set by Congress to account for inflation. High inflation prompted the IRS to raise thresholds by 7% for income tax brackets for taxes on 2023 income. The changes push some taxpayers into lower tax brackets, while those using the standard deduction can deduct more of their tax revenue.
"For 2024 refunds, some relatively large inflation adjustments to tax brackets and the standard deduction should help taxpayers who have not seen a corresponding inflationary increase in their income," Mark Luscombe, Principal Analyst for Wolters Kluwer's Tax and Accounting Division North America said. "Also, in 2023, there were several new or enhanced clean energy-related tax breaks for clean vehicles and energy-efficient home improvements that could also add to taxpayer refunds."
Many Americans got smaller-than-expected tax refunds last year (for the 2022 tax year) afterpandemic-era tax creditsexpired. The Child Tax Credit (CTC), Earned Income Tax Credit (EITC) and Child and Dependent Care Credit wereamong the affected credits. The average tax refund amount reported by the Internal Revenue Service (IRS) was $2,803 – more than a 7% drop from the average refund amount in 2022, which averaged $3,025.
If you expect a smaller refund this tax season and are struggling to pay down debt, you could consider consolidating it with a personal loan. Credible can help you find your personalized interest rate without affecting your credit score.
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Child Tax credit could further boost refunds
A new tax bill passed by the U.S. House of Representatives includes retroactive changes to the CTC that could further boost refunds in 2024, according to Luscombe.
If passed by the Senate intact, the bill called the Tax Relief for American Families and Workers Act of 2024 would increase the maximum refundable amount per child from the current level of $1,600 per child to $1,800 for tax year 2023; $1,900 for tax year 2024; $2,000 for tax year 2025; and then tie additional increases to inflation for tax years beyond 2025.
"Still up in the air is a tax bill in Congress that would retroactively increase the Child Tax Credit for 2023 for lower-income taxpayers," Luscombe said. "Should that be enacted and made retroactive to 2023, that could provide additional refunds for 2023 tax returns."
The American Rescue Plan increased the CTC from $2,000 to $3,000 per child for children ages 6 and over and to $3,600 per child for children under 6, but it expired at the end of 2021.
If you are struggling to pay off debt, you could consider using a personal loan to consolidate your payments at a lower interest rate, saving you money each month. Visit Credible to find your personalized interest rate without affecting your credit score.
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Some worry refunds may be less
Over half of Americans (56%) said that rising costs, debt and unemployment are why they live paycheck to paycheck, according to a recent TaxActsurvey. Moreover, 75% are worried about paying for necessities such as food and utilities (77%) and many don't think their tax refunds this year will help offset these costs.
"We're seeing that financial worries are impacting Americans across the board and are a key point of concern going into tax season," TaxAct Chief Product Officer Bastien Martini said. "People are looking to save as much as possible and make the most of their money."
Besides worrying that tax refunds will be smaller this year, 35% of Americans are concerned about filing their taxes incorrectly and 37% don't understand what deductions to take. Another 29% are concerned they may be audited.
If you think you will receive a smaller refund this tax season but have debt you need to pay down, you could consider consolidating it with a personal loan. You can visit Credible to find your personalized interest rate without affecting your credit score.
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Have a finance-related question, but don't know who to ask? Email The Credible Money Expert atmoneyexpert@credible.comand your question might be answeredby Crediblein our Money Expert column.
FAQs
So far in 2024, the average federal income tax refund is $2,850, an increase of 3.5% from 2023. It's not entirely unexpected: To adjust for inflation, the IRS raised both the standard deduction and tax brackets by about 7%.
Why is my refund so much higher this year? ›
Returns are larger on average this year after the IRS adjusted certain tax provisions to offset inflation. The standard deduction was increased by a historically high 7% for 2023 tax returns.
Has the IRS started approving refunds in 2024? ›
Tax season began on Jan. 29, 2024, when the IRS started accepting and processing 2023 tax returns. Taxes were officially due on April 15, 2024, and millions of Americans are eagerly anticipating getting money back.
What is the average tax refund for $75000? ›
Which income bracket got the biggest refund?
| Income level | Average refund | % of income |
|---|
| $25,000 to $49,999 | $2,845.81 | 5.7% to 11.4% |
| $50,000 to $74,999 | $2,830.10 | 3.8% to 5.7% |
| $75,000 to $99,999 | $3,347.69 | 3.3% to 4.5% |
| $100,000 to $199,999 | $4,436.36 | 2.2% to 4.4% |
3 more rowsApr 14, 2024
Both federal income tax brackets and the standard deduction were raised for 2024. The higher amounts will apply to your 2024 taxes, which you'll file in 2025. It's normal for the IRS to make tax code changes each year to account for inflation.
What is the average tax refund in 2024? ›
The average refund was $3,011, a 4.6% increase from last April's average of $2,878. Here are major filing season numbers in 10 key areas. These numbers, generally from late March and early April, reflect the historic 2024 tax season taking place at the IRS: Improved phone service.
Why am I getting such a big refund? ›
The maximum earned income tax credit (EITC) amount increased by nearly $500 for the 2023 tax year. And because the credit is 100% refundable, eligible taxpayers could receive the entire amount (up to $7,430) back as a tax refund.
How much is the child tax credit for 2024? ›
The child tax credit is a $2,000 benefit available to those with dependent children under 17. For the 2024 filing season, $1,600 of the credit was potentially refundable.
What day is the IRS releasing EITC refunds in 2024? ›
The IRS expects most EITC and ACTC related refunds to be available in taxpayer bank accounts or on debit cards by Feb. 27, 2024, if the taxpayer chose direct deposit and there are no other issues with the tax return.
What is the extra child tax credit for 2024? ›
The new rules would increase the maximum refundable amount from $1,600 per child. For the tax year 2023, it would increase to $1,800; for the tax year 2024, to $1,900; and for the tax year 2025, to $2,000. The 2024 and 2025 amounts would be adjusted for inflation.
Requirements to receive up to $7,000 for the Earned Income Tax Credit refund (EITC)
- Have worked and earned income under $63,398.
- Have investment income below $11,000 in the tax year 2023.
- Have a valid Social Security number by the due date of your 2023 return (including extensions)
You could end up with a $10,000 tax refund if you've paid significantly more tax payments than you owe at the end of the year.
What is the biggest tax refund ever? ›
Ramon Christopher Blanchett, of Tampa, Florida, and self-described freelancer, managed to scoop up a $980,000 tax refund after submitting his self-prepared 2016 tax return. He also allegedly claimed that he earned a total of $18,497 in wages — and that he had withheld $1 million in income taxes, according to a Jan.
Why is my 2024 refund so low? ›
You may be in line for a smaller tax refund this year if your income rose in 2023. Earning a lot of interest in a bank account could also lead to a smaller refund. A smaller refund isn't necessarily terrible, since it means you got paid sooner rather than loaning the IRS money for no good reason.
What's new for 2024 taxes? ›
For single taxpayers and married individuals filing separately, the standard deduction rises to $14,600 for 2024, an increase of $750 from 2023; and for heads of households, the standard deduction will be $21,900 for tax year 2024, an increase of $1,100 from the amount for tax year 2023.
Will my paycheck be bigger in 2024? ›
Your paycheck could be slightly bigger in 2024 due to federal income tax bracket adjustments, experts say. However, you should still review your federal and state withholdings throughout the year to avoid a surprise tax bill.
What is the average tax return for a single person making $40,000? ›
If you make $40,000 a year living in the region of California, USA, you will be taxed $7,507. That means that your net pay will be $32,493 per year, or $2,708 per month.
What is the average tax return for a single person making $35,000? ›
If you make $35,000 a year living in the region of California, USA, you will be taxed $6,243. That means that your net pay will be $28,757 per year, or $2,396 per month.
Is everyone getting a smaller tax refund in 2024? ›
After a slow start to the 2024 tax season, the average tax refund this year is now up to $3,070, a 6% increase from this time in 2023. While a $3,000 check in April is a welcome cash infusion, wouldn't it be even better to get $6,000 back? How about $10,000? Or $20,000?
