Many taxpayers are used to receiving large refunds during tax season, but this year that is not the case. According to the Internal Revenue Service, the average tax refund is down by 8.4 percent from the same time last year.
The Tax Cuts and Jobs Act passed in late 2017 cut tax rates for most Americans. Employers withhold less income tax on paychecks with the new law. As a result, people have seen a little more money this year each payday.
Finance Professor at Francis Marion University, Dr. Neil Riley said it all has to do with your withholdings.
“Because the tax rates have gone down, the withholdings are less. You have less of a tax bill, so you get less of a refund,” Riley said.
But, several taxpayers did not realize they would get the benefits of lower rates throughout the year.
People who file and end up owing money are encouraged to adjust their withholdings through they employer, so they have less to pay back next season.
Although some individuals prefer getting a large amount all at once, others rather see small amounts in each paycheck.
“I prefer to get more taxes taken out in each paycheck, so I don’t have an unplanned expense or unplanned refund at the end of the year,” said Taxpayer Scott Warren.
The last day for filing taxes in most states is April 15.
