Why Is My 2024 Tax Refund Higher Than in 2021?

The Internal Revenue Service (IRS) has announced that taxpayers can expect larger refunds in 2024 due to adjustments in tax brackets and other provisions. This news has raised questions among taxpayers who are eager to understand the reasons behind the increase. In this article, we will delve into the factors contributing to higher refunds and provide insights into what taxpayers can expect.

IRS Adjustments and Inflation

One of the primary reasons for the larger refunds is the IRS’s adjustment of tax brackets and the standard deduction for inflation. The IRS increased the standard deduction by 7.1% for 2023, which means that more of your income is exempt from taxation. Additionally, the tax brackets have been adjusted upward by the same percentage, resulting in lower tax rates for many taxpayers.

Impact of Inflation on Earnings

Another factor contributing to higher refunds is the impact of inflation on earnings. While the median worker saw their earnings increase by about 5.5% in 2023, inflation has eroded purchasing power, leaving many taxpayers with effectively lower incomes. As a result, they may qualify for a larger refund due to paying more taxes than necessary throughout the year.

Expanded Earned Income Tax Credit

The Earned Income Tax Credit (EITC) is a tax credit for low- and moderate-income working individuals and families. For the 2023 tax year, the maximum EITC credit has increased to $7,430, up from $6,935 the previous year. This expansion of the EITC will result in larger refunds for eligible taxpayers.

Other Factors

In addition to the above factors, other changes in tax laws and regulations may also contribute to higher refunds. For example, the suspension of the additional child tax credit for 2023 may lead to a larger refund for taxpayers who received the credit in 2021 and 2022.

When to Expect Your Refund

The IRS began accepting tax returns on January 29, 2024. Most taxpayers can expect to receive their refunds within 21 days of filing their returns. However, it’s important to note that some returns may take longer to process, especially if they require additional review.

How to Check Your Refund Status

You can check the status of your refund using the IRS’s “Where’s My Refund?” tool on the IRS website or through the IRS2Go mobile app. You will need to provide your Social Security number, filing status, and the exact amount of your refund to access this information.

Taxpayers can expect larger refunds in 2024 due to a combination of factors, including IRS adjustments for inflation, the impact of inflation on earnings, and the expansion of the Earned Income Tax Credit. While the exact amount of your refund will vary depending on your individual circumstances, many taxpayers are likely to see a noticeable increase compared to previous years. By understanding the reasons behind the higher refunds, you can better plan for your financial future and make informed decisions about your tax obligations.

IRS Tax Refund Update – Delays and Smaller Refunds


Why is my tax refund higher than last year?

As far as dollar signs go, that’s over $150 higher than last year’s average refund as of the first week of March. The increase is likely due to tax bracket changes the IRS made to counteract inflation after the 2023 filing season.

Why did the IRS change my refund amount 2021?

If a taxpayer refund isn’t what is expected, it may be due to changes the IRS made to the return. These changes could include corrections to the Child Tax Credit or Earned Income Tax Credit amounts or an offset from all or part of the refund amount to pay past-due tax or debts.

Why am i getting less back in taxes this year 2024?

You may be in line for a smaller tax refund this year if your income rose in 2023. Earning a lot of interest in a bank account could also lead to a smaller refund. A smaller refund isn’t necessarily terrible, since it means you got paid sooner rather than loaning the IRS money for no good reason.

What if my tax refund is higher than I expected?

If you receive a refund to which you’re not entitled, or for an amount that’s more than you expected, don’t cash the check. For a direct deposit that was greater than expected, immediately contact the IRS at 800-829-1040 and your bank or financial institution.

How much is a tax refund in 2021?

How to Track Your Tax Refund Status Through March 25, the average federal tax refund was $3,337, up 12.8% from the same period last year, according to the IRS. In 2021, the average refund was $2,959 by the same date.

Why are tax refunds so high in 2024?

(Just to clarify: The taxes being filed in spring 2024 are for 2023.) As far as dollar signs go, that’s over $150 higher than last year’s average refund as of the first week of March. The increase is likely due to tax bracket changes the IRS made to counteract inflation after the 2023 filing season.

Why are tax refunds so big this year?

Last year, many taxpayers received smaller refunds during a period of still-high inflation due to the expiration of pandemic benefits like the expanded child tax credit. Returns are larger on average this year after the IRS adjusted certain tax provisions to offset inflation.

Will my 2023 tax refund increase?

Since the EITC is worth up to $7,430 for the 2023 tax year, average refund amounts will most likely increase further as tax season progresses. Keep in mind that just because early tax filing data doesn’t fully reflect 2024 refund amounts doesn’t mean your refund won’t still be lower this year.

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