Tax refunds are about 10% smaller than a year ago, according to the latest data from the Internal Revenue Service, and slightly fewer have been distributed this year with just over a week left in the filing season.
The average refund amount was $2,910 as of March 31, down 9.8% from $3,226 the same period last year, the IRS reported. That’s based on just over 62.9 million refunds the agency has disbursed this year versus nearly 63.4 million refunds sent out last year.
Since the beginning of this tax season, the average refund has come in lower than last year's based on the weekly filing statistics, underscoring how the loss of several pandemic-era tax breaks has translated to a smaller, key windfall for many American households.
“This year, the biggest change was the Child Tax Credit being lowered back to the normal amount,” Rus Garofalo, founder and president of BrassTaxes, told Yahoo Finance.
The average refund last year was 14.3% more than in 2021, with the increase largely due to temporary enhancements to the Child Tax Credit (CTC), Earned Income Tax Credit (EITC), and Child and Dependent Care Credit. Those credit amounts are now back to pre-COVID levels.
For example, the CTC declined to $2,000 per child dependent versus $3,600 last year. It’s also not fully refundable anymore, meaning taxpayers won’t receive the full credit if it exceeds the amount of tax they paid — a change that hurts the lowest-earning families the most.
The maximum EITC amount that single filers with no children are eligible for is $500 this year. Last tax season, these filers got as much as $1,502 for the credit, which also had a higher income threshold then.
The Child and Dependent Care Credit — which covers out-of-pocket expenses for child care and day camps — was reduced this year to $2,100 compared with last year’s $8,000.
The loss of the above-the-line charitable deduction and the expiration of the mortgage insurance premium deduction also could factor into lower refunds.
Of the 168 million individual tax returns the IRS expects this year, the agency has received 90.1 million so far, almost on track with the nearly 91.3 million received last year at this time.
The IRS also appears to be on top of the returns coming in. As of March 31, the agency had processed over almost 89.7 million tax returns, or 99.5% of those received. Slightly more taxpayers are also e-filing their returns and choosing direct deposit for their refunds, heeding the agency’s earlier advice to get a faster refund.
Another sign that it’s been a relatively smoother tax season this year? Visits to the IRS website are down 17.4% versus last year.
Gabriella Cruz-Martinez contributed to the article.
Ronda is a personal finance senior reporter for Yahoo Finance and attorney with experience in law, insurance, education, and government. Follow her on Twitter @writesronda
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