See how much the IRS is sending for the average 2024 tax refund

Hey there, high school and college students! Let’s talk about something that might not be on your radar yet, but it’s super important – tax refunds. This year, there’s some good news for many Americans who have been feeling the pinch of inflation. The IRS is sending out tax refunds that are, on average, bigger than last year. So, what’s the deal with these refunds, and why should you care? Let’s break it down.

As of February 23, the average tax refund stands at $3,213, which is a 4% increase from last year. This boost is a welcome change from last year when refunds were smaller due to the expiration of pandemic benefits. Remember, in 2023, the typical refund was 11% lower than in 2022. Ouch!

So why the increase this year? It’s all thanks to the IRS adjusting many tax provisions for inflation. The standard deduction and tax brackets for the 2023 tax year (the taxes you’re filing now) were set 7% higher. This means that workers whose pay didn’t keep up with last year’s high inflation could see bigger refunds – some might even get up to 10% more!

But how do Americans use these refunds? A study from Bankrate found that about two-thirds of U.S. adults expect a tax refund, which often represents the biggest annual influx of cash for households. Instead of splurging, many plan to use this money to pay down debt or boost their savings. Smart move!

Even with this year’s higher average refund, it’s still less than what people received two years ago, when pandemic-era benefits like the expanded child tax credit were in play. However, refunds are still higher than they were from 2018 to 2021.

Tax refunds also play a big role in the economy. Many people use their refunds to make significant purchases like cars or home renovations, which can give a nice boost to certain sectors like general merchandise stores and used-car dealerships.

Remember, it’s still early in the tax season, and things could change as we approach the April 15 filing deadline. So, keep an eye on those refunds!…………[read more]

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Considering the impact of tax refunds on consumer spending and the economy, how might changes in tax policies and inflation rates influence individuals’ and families’ financial decisions and purchasing power?

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