The second week of tax season has wrapped up, and refunds are still smaller compared to last year.
Since the IRS began accepting returns on Jan. 28, the agency has managed to process 26.9 million individual income tax returns as of Feb. 8, according to data from the tax authority.
Uncle Sam is also sending out refund checks to those who are eligible, yet they continue to be smaller than they were a year ago.
The average refund issued as of Feb. 8 was $1,949, down 8.7 percent from $2,135 a year earlier, according to new IRS data.
Part of the reason could be due to changes in light of the Tax Cuts and Jobs Act, which went into effect last year. If you withheld less in income taxes last year, you took home more pay — which resulted in a smaller refund this spring.
“Most people are seeing the benefits of the tax cut in larger paychecks throughout the year, instead of tax refunds that are the result of people overpaying the government,” a Treasury spokesperson said.
“Smaller refunds mean that people are withholding appropriately based on their tax liability, which is positive news for taxpayers.”
Indeed, Uncle Sam has reminded filers to review their withholding throughout 2018 to ensure they’re paying the right amount in light of the new tax law.
It’s a balancing act: Large refunds suggest you may be withholding too much in tax from your pay over the course of the year.
Other major changes from the new tax law include a nearly doubled standard deduction, the elimination of personal exemptions and limits on certain itemized deductions, including a new $10,000 cap on the state and local tax deduction.
The new tax law also cut individual income tax rates.
Here’s what your bracket will be in 2019: