The Internal Revenue Service (IRS) reports the average refund has declined 8.4%, compared to the same period last year.The number of returns received also declined more than 12% during the first full week of filing (ending February 1).
The average filer is getting a refund of $1,865 for their 2018 returns, compared to $2,035 for the 2017 filing year.
Congress passed a sweeping tax reform package in 2017, and financial experts had warned that many filers would receive smaller-than-expected refunds in the first full year under the new law if they didn’t adjust the withholdings on their paychecks.
According to Intuit Turbo Tax , about 30% of taxpayers itemized in the past, but those numbers are expected to decline because there are fewer allowable deductions and a higher standard deduction.Personal exemptions and other popular deductions – like moving expenses and state and local taxes - were either eliminated or restricted under the new tax law.The standard deduction was raised to cover the loss of those itemized deductions; single individuals get a $12,000 deduction; married couples get $24,000.Thresholds for tax rates were also lowered.
There is no consensus about the size and number of refunds that are expected this year.Democrats, who uniformly opposed the tax reform law, claim more people will owe money this year because of confusion over the changes.
But Woodlands Congressman Kevin Brady , who as ranking member of the House Ways & Means Committee was a prime architect of the plan, expects the number of taxpayers getting refunds to remain around the same as in previous years.
The IRS also issued a statement:
“IRS systems are operating smoothly to start the filing season, and refunds are being issued… The IRS encourages taxpayers to e-file as the quickest way to receive their refunds."