The Average 2019 Tax Refund Is Down By Double Digits From Last Year
According to new data released by the IRS on Friday, tax refunds are lower than they were last year for the third week in a row. 2018 was the first tax year under the GOP-backed Tax Cuts and Jobs Act — and as a result, the average 2019 tax refund is down by 17 percent from last year, according to Politico.
Americans were receiving an average tax refund of $3,169 at this time last year, per the new IRS data. However, in 2019, the average tax refund has been just $2,640, marking a 16.7 percent drop from 2018. In a statement issued last week, the Treasury Department defended this decline in tax refunds, arguing that taxpayers are largely benefiting from new tax legislation.
“Most people are seeing the benefits of the tax cut in larger paychecks throughout the year, instead of tax refunds that are the result of people overpaying the government,” the Treasury Department's statement said, as quoted by Fortune. “Smaller refunds mean that people are withholding appropriately based on their tax liability, which is positive news for taxpayers.”
As HuffPost pointed out, however, many Americans rely on tax refunds to assuage financial difficulties. Taxpayers with lower incomes often use their refunds to make large purchases or important payments, HuffPost reported. But in the Treasury Department's view, lower refunds are an indication that taxpayers had a sufficient amount of money withheld from their paychecks throughout the year, which means they have less to settle up with the government come tax season.
One main reason tax refunds are lower on average this year is that President Trump's tax legislation eliminated some popular deductions and revised withholding tables, thereby causing many taxpayers to under-withhold income for tax purposes. After the new tax law was implemented, the IRS encouraged taxpayers to double-check how much money they needed to withhold using a special calculator, but Politico reported that many Americans did not necessarily heed the bureau's advice.
But tax refunds are not the only thing that are down from last year. According to the latest data from the IRS, fewer taxpayers have filed their tax returns during the current filing season than they did during the same time period last year. So far this year, the IRS has processed 6.6 percent fewer returns than at this point in 2018.
Trump has faced significant backlash following the news that tax refunds are lower this year, and Republicans are scrambling to defend the Tax Cuts and Jobs Act, Politico reported. The Treasury Department has attributed the reduction in tax refunds to "aberrations" in data this early in the filing season, and GOP lawmakers are arguing that most Americans got tax cuts in 2018.
However, many Americans have criticized Trump's tax bill for disproportionately cutting taxes for the super-wealthy, noting that Fortune 500 companies owe very little in taxes despite raking in sizable profits. Indeed, the new legislation altered tax brackets dramatically, bringing the top corporate tax rate down from 35 percent to 21 percent, according to Axios.