Bidenomics: Tax Refunds Shrinking Significantly This Year
As tax season gets into full swing, Americans face a stark reality — their tax refunds are significantly smaller this year. The Internal Revenue Service (IRS) has reported that the average refund check, as of February 2, is approximately 29% lower than last year’s figures. This average refund has fallen from $1,963 to $1,395.
Smaller refunds will come as an unwelcome surprise for many American families who depend on the annual repayment to handle expenses, pay down debt, or increase savings. Moreover, the timing couldn’t be worse, as ordinary consumers are struggling with the consequences of persistently high inflation and higher interest rates mandated by the Federal Reserve in response to the torrent of federal spending flooding the marketplace with too many dollars chasing too few goods.
The IRS suggests that the early data, which shows a dramatic decrease in refund amounts, is preliminary. Yet, the numbers are alarming and indicative of a broader trend of financial strain. The agency has tried to temper concerns by noting that the average refund amount might change as more returns are processed. However, this does little to ease the immediate anxieties of taxpayers facing the pinch.
The smaller tax refunds are symptomatic of a more significant issue — the disconnect between federal policies and the real-life experiences of ordinary citizens. The end of pandemic-era benefits last year already had a significant impact, leading to reduced refunds and compounding the financial difficulties many households face.
Ironically, the IRS’s adjustments for inflation could mean that some taxpayers might see larger refunds if their income did not outpace inflation. However, this silver lining is scant comfort for those currently navigating the economic turbulence. The IRS’s significant adjustment of tax brackets by 7.1% reflects the agency’s acknowledgment of inflation. Yet, it also underscores the inflationary challenges that have overshadowed the past year.
Furthermore, the IRS has issued a caution: to receive a refund within 21 days of filing, taxpayers must submit their returns electronically and ensure accuracy and completeness. But even then, some may face delays if additional reviews are needed, adding another layer of uncertainty to an already stressful process.
As the April deadline for tax returns approaches, many Americans are left to navigate the complexities of the tax system and brace for potentially smaller refunds. The early figures from the IRS serve as a sobering reminder of the financial challenges facing many households.
