WASHINGTON — With over 16 million tax returns already processed, Americans might have noticed a smaller amount on their tax refunds this year.
Refunds are so far coming in nearly 11% smaller than last year, according to early data from the Internal Revenue Service. As of Feb. 3, the average refund was $1,963, a 10.8% decline from the $2,201 average in early 2022 reports.
Although the average may change as more returns are processed, taxpayers are likely to see a lower refund due to a number of key tax credits returning to pre-pandemic amounts.
The IRS expects more than 168 million individual tax returns for this tax season.
Why is my tax refund smaller this year?
Child tax credit changes for 2023
One of the biggest changes is the loss of the expanded child tax credit, which was raised from $2,000 to as much as $3,600 per dependent in 2021.
Most families received half of their expanded 2021 credit on a monthly basis and got the other half once they filed their taxes.
But the pandemic-era expansion ended in 2022 and full payments will once again only go to families that earned enough income to owe taxes, a policy choice that will limit the benefits for the poorest households.
"It's going to affect families in very different ways, depending on the household makeup, income," said Joanna Ain, associate director of policy for Prosperity Now, a national nonprofit focused on opportunities for low-income families and racial economic justice. "I think a lot of families are going to be disappointed this year when they don't have access to this really critical tax credit."
The child tax credit lifted 2.9 million children out of poverty in 2021, according to estimates from the U.S. Census Bureau. The agency found the program's expansion specifically accounted for keeping 2.1 million of those 2.9 million children above the poverty line.
Other tax credit changes
The earned income tax credit and the child and dependent care credit will also return to 2019 standards.
The EITC, which is available for low- to moderate-income families and people without children, will now be $500 as opposed to the $1,500 given in 2021 to those who qualify. The child and dependent care credit returned to a maximum of $2,100, a stark difference from the maximum of $8,000 set in 2021.
When can I expect my tax refund?
The IRS expects most taxpayers who choose direct deposit and had no issues to receive their refund within 21 days of electronically filing their tax returns.
Taxpayers can check the agency's "Where's My Refund?" page on IRS.gov for a status on their refunds.
If you are waiting for a refund and claimed the earned income tax credit or additional child tax credit, the IRS won't issue those refunds until around Feb. 28 or a few days earlier. The agency explains on its website that by law they can't issue EITC or ACTC refunds before mid-February. Most EITC or ACTC refund statuses on the IRS website will be available starting Feb. 18.
When is the deadline to file taxes?
Americans will have until April 18 to file their tax returns, granting them an extra three days from the usual deadline.
The extra days happened because the normal filing date of April 15 falls on a weekend and the District of Columbia’s Emancipation Day holiday falls on April 17.