ECONOMY & WORK
MONEY 101
NEWS
PERSONAL FINANCE
NET WORTH
About Us Contact Us Privacy Policy Terms of Use DMCA Opt-out of personalized ads
© Copyright 2023 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.
MARKETREALIST.COM / ECONOMY & WORK

IRS Adjustments for 2024 Tax Brackets Could Yield Larger Refunds

The Internal Revenue Service (IRS) has announced that tax refunds are on the rise this year compared to the previous year
PUBLISHED MAR 5, 2024
Cover Image Source: Photo by Nataliya Vaitkevich | Pexels
Cover Image Source: Photo by Nataliya Vaitkevich | Pexels

The IRS's inflation-adjusted changes to tax brackets and basic deductions for 2024 are expected to result in larger tax refunds for certain individuals. These adjustments reflect the rising cost of living, potentially allowing individuals whose incomes have not increased significantly to pay less in taxes or receive more money back. 

Image Source: Getty Images | Photo by Scott Olson
Image Source: Getty Images | Photo by Scott Olson

As of February 16, the average tax refund stands at $3,207, marking a 2.1% increase from the same period last year. This increase in average refunds comes as a reversal from the decline observed in 2023 when refunds were 3% lower due to the expiration of pandemic-related tax benefits.

The adjustment of IRS provisions for inflation for the 2023 tax year, including increases in the standard deduction and tax brackets by about 7%, has contributed to the larger refunds seen this year.

Workers whose wages did not keep pace with inflation in the previous year are expected to receive even larger tax refunds, potentially up to 10% more, according to Mark Steber, Chief Tax Information Officer at Jackson Hewitt.  

Pexels | Nataliya Vaitkevich
Image Source: Pexels | Photo by Nataliya Vaitkevich

New tax credits introduced in 2023, such as those for energy-efficient home modifications and the purchase of clean vehicles, could lead to higher tax refunds for eligible individuals. In contrast, many taxpayers experienced smaller-than-expected tax refunds in 2022 due to the pandemic-related expiration of certain tax credits like the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC).

However, a proposed tax measure, the Tax Relief for American Families and Workers Act of 2024, aims to enhance the Child Tax Credit, potentially resulting in larger refunds for eligible individuals in 2024 and beyond.

Furthermore, pending legislation in Congress seeks to retroactively enhance the Child Tax Credit for 2023, particularly benefiting lower-income individuals. This could lead to additional refunds for those filing their 2023 tax returns. However, financial stress remains a concern for many Americans, with a significant portion living paycheck to paycheck and worrying about covering necessities like food and energy.

Image Source: Photo by RDNE Stock project |Pexels
Image Source: Photo by RDNE Stock project | Pexels

This year, certain taxpayers may find themselves owing more, especially if they engaged in side gigs to counter the effects of inflation in the previous year but failed to pay quarterly self-employment taxes. Moreover, families with teenage children who no longer qualify for the $2,000 child tax credit, restricted to kids under 17, may experience reduced refunds.

While the current average tax refund is $3,207, it's important to note that there are still seven weeks remaining in the tax season, and the data may fluctuate until the IRS's tax return deadline on April 15.

Furthermore, taxpayers have the option to request an automatic extension, extending the filing deadline to October 15. As of now, approximately 34.7 million tax returns have been filed, a fraction of the 146 million individual tax returns expected by the IRS for the year. 

MORE ON MARKET REALIST
The pawn shop owner made a deal with the seller that he'd pay more if the gun worked.
18 hours ago
Amber Lancaster handled the situation gracefully, and even congratulated the player on his impressive win.
20 hours ago
The contestant, Diane, gave a couple of cheeky answers that caught Steve Harvey off guard.
1 day ago
The guest was expecting $22,000 for a Led Zeppelin album that was signed by all four members.
1 day ago
Fans shared their excitement for the upcoming season, with many hoping to see another million-dollar winner.
1 day ago
The host noted that contestant was already a crowd favorite, and his kind gesture made Josh feel like a star.
1 day ago
The item’s uniqueness kept Rick Harrison from making an offer, as there was no reference point for its value.
2 days ago
The entrepreneur 's business was immensely profitable which made her a confident negotiator.
2 days ago
The host did not hold back on his roast, but the contestant took it all in good humor.
2 days ago
The company made sure that pets were well-dressed and taken care of on the owner's wedding day.
3 days ago
The player, Leslie, decided to trust her gut instead of listening to the audience,and it really paid off.
3 days ago
The company had more than $18 million in sales in just the 12 months ahead of taping.
3 days ago
The pawn shop owner did not expect the grinder to be worth so much money.
4 days ago
The host of the show loved the answer and did not hold back on expressing his feelings.
4 days ago
The guest got a lot more than he hoped for after the expert authenticated the item.
4 days ago
Mark Cuban wanted to take over his entire business and made a generous offer, but Pizza Pack founder Tate Koenig wasn't interested.
5 days ago
The host had a hard time finding a response as he remained speechless for several seconds.
5 days ago
Applicants who are 18 and above can take up more than one test every 12 months, but they cannot leave a test incomplete.
5 days ago
After a tough pitch and some criticism, Sheets Laundry Club founders Chris Videau and Chris Campbell managed to bag a deal.
6 days ago
It was a witty answer, but the respondents of the survey didn't think that way.
6 days ago