Tax refunds are down 17 percent compared with last year, nearly $550, according to the IRS.
In the last tax cycle, the average refund by Feb. 16 — the halfway mark of the tax season — was $3,256. This year, the average refund stands at $2,703. The total number of people who were eligible for tax returns also decreased, by 26.5 percent from one tax year to the next.
The 2018 tax season is the first full cycle after Republicans passed the Tax Cuts and Jobs Act in late 2017.
Democrats have jumped on stories about smaller returns to criticize the reform, including Rep. Bill Pascrell Jr., of New Jersey. Pascrell said on Twitter this week those filing who did not receive a return should look no further than the profits notched by banks.
If you’re filing your taxes and got no refund, just remember: republicans gave the super rich and big business $1.5 trillion in tax cuts. That’s where your refund went. https://t.co/QD6xJ5BQ6X
— Bill Pascrell, Jr. (@BillPascrell) February 22, 2019
But a Treasury Department spokesman said that the smaller refunds are mostly because people paying less in taxes every paycheck. “Most people are seeing the benefits of the tax cuts in larger paychecks throughout the year, instead of tax refunds that are the result of people overpaying the government,” the spokesman said.
Under the new tax law, the amount of taxes withheld from a check is calculated using two factors: the percentage of taxable income withheld scheduled by the new withholding tables and the amount of allowances and deductions declared by the claimant at the time of filing. The new tax law heavily reformed both of those.
A tax refund is the amount a person overpaid the federal government in taxes, and smaller refunds don’t necessarily mean higher tax liability.
Texas Rep. Kevin Brady, the current ranking member of the Ways and Means Committee and the head architect of the tax reform bill in the House, defended the law in an op-ed on Wednesday.
“The size of your tax refund has nothing to do with your overall tax bill. It merely reflects what you overpaid the IRS in your paychecks last year,” they said. “For most Americans, the Tax Cuts and Jobs Act delivered larger paychecks starting last February, even if many workers didn’t notice.”
