The first tax filing season under President Trump’s new tax law is over and the results show that slightly more Americans received tax refunds but the checks were smaller.
The average refund this year was $2,725, down $55 from last year, according to data released Wednesday by the Internal Revenue Service that includes every return filed by the deadline.
Many Americans lashed out at Trump and Republicans on social media as they filed tax returns and realized they would receive a lower refund than they obtained last year. Americans have come to love tax refunds, viewing them almost like a bonus, even though all it means is that a person overpaid their taxes during the year and is now receiving that extra amount back.
Financial experts advise people not to get refunds because it just means someone loaned the federal government money for awhile. But IRS data show that the vast majority of tax filers — 73.2 percent (nearly 96 million people) — received refunds this filing season, a slight increase from 73.1 percent who received refunds during the 2018 tax filing season.
IRS and U.S. Treasury officials anticipated that fewer people would receive refunds this year and the amounts would be lower, but the refund trends turned out to be similar to the prior year.
After the new tax law took effect, IRS staff tweaked the withholding calculations, the amount of money deducted for taxes from a person’s paycheck, to adjust for the new rules and to try to make it so that more Americans were “perfectly withheld,” meaning they would neither get a refund nor owe any money when they filed their tax returns. The IRS predicted that several million fewer people would get refunds, but that did not turn out to be the case.
It’s unclear how many Americans received a significantly smaller refund this year compared to last. The IRS only provides the average refund which doesn’t give enough information to know how many people might have been impacted.
Some people confused a smaller refund as a sign they did not get a tax cut, but there is no connection between them.
The vast majority of Americans were expected to get a tax cut in the first year under the new law, according to independent groups like the Tax Policy Center and Congress’s Joint Committee on Taxation. About 65 percent of Americans were expected to get a tax cut, according to TPC with the middle class getting about $1,000.
No Democrats voted for the new tax law and polling shows ongoing frustration among many Americans that the tax cut gives more benefits to the wealthy than the middle or working classes. Taxpayers in the top 1 percent (those earning more than $733,000) received a benefit of $51,000 or 3.4 percent of their income, TPC said. Middle-class taxpayers (those making about $49,000 to $86,000) were expected to get a benefit of $930, or 1.6 percent of their income.
The White House stresses that Americans give the economy high marks overall even if they have less favorable views of the tax law.
IRS data released Wednesday includes all returns filed by April 19 and indicates that more people filed their returns online this year and that slightly more people managed to file by the April 15 deadline.
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