Why your IRS tax refund may be smaller this year

Uncle Sam is being a little stingy this year when it comes to refunds on Americans’ income tax returns.

The average refund check given to the 72 million Americans who filed their 2022 income tax returns as of March 17 was 11% lower, according to Figures calculated by the Internal Revenue Service.

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IRS figures were First quoted by Bloomberg News.

According to the tax-collection agency, the average refund payment was $2,993 – down 9.4% from $3,305 at the same time last year.

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As of March 17, the federal government has paid out $158 billion in income tax refunds – down from $171 billion a year earlier.

Experts told Bloomberg News that the shift can be attributed to the rollback of COVID-era government benefits.

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In 2021, the Biden administration raised the child tax credit from $2,000 to $3,600 for children under the age of six under the American Rescue Plan.

But the gain was temporary and the administration’s efforts to increase it failed to garner support from Congress.

The smaller refunds come at an opportune time for millions of Americans who are struggling to make ends meet due to extremely high levels of inflation.

Prices rose 0.4% last month, down just below January’s 0.5% increase.

Yet excluding volatile food and energy costs, so-called core prices rose 0.5% in February, slightly higher than January’s 0.4% gain.

When measured against prices a year ago, inflation has been declining for eight months. In February, consumer prices climbed 6% from 12 months earlier, down from January’s 6.4% year-over-year increase and down from a recent peak of 9.1% in June.

Yet it remains well above the Fed’s 2% annual inflation target. Core prices rose 5.5% in February from the 12 months prior, down slightly from 5.6% in January.

post with wires