Here is some intriguing data from the IRS on tax refunds, for the most recent tax year (2021), which I found interesting (and hope you do too).
Let’s look at the numbers:
- As of October 28, 2022, 164,246,000 tax returns were submitted for the year.
- 151,448,000 of the 164,246,000 returns, or 92.2%, of returns were e-filed (impressive).
- And 108,622,000 of the 164,246,000 returns received refunds (not impressive).
You know what that means…
It looks like Tax Refund Windfall Syndrome (TRWS) got the best of us once again!
Average Tax Refund:
That math works out to just over 66.1% of all returns resulting in a refund.
The average tax refund works out to $3,176 in 2021, an increase of $385 over the previous year.
This means that Uncle Sam received an average of $3,176 in interest-free loans from 108,622,000 lenders (aka taxpayers), for a combined $344.95 billion. And this is a lower number than it should have been, given that many people who did not file returns filed this past year in order to receive COVID-19 relief checks from the federal government.
What a waste!
How does last year stack up against the historical average?
Average Historical Tax Refund:
Over time, the historical average tax refund has gone up and down, but here is a look at the last number of years.
- Average 2008 Tax Refund: $2,728
- Average 2009 Tax Refund: $3,036
- Average 2010 Tax Refund: $3,003
- Average 2011 Tax Refund: $2,913
- Average 2012 Tax Refund: $2,803
- Average 2013 Tax Refund: $2,651
- Average 2014 Tax Refund: $2,952
- Average 2015 Tax Refund: $2,793
- Average 2016 Tax Refund: $2,857
- Average 2017 Tax Refund: $2,899
- Average 2018 Tax Refund: $2,979
- Average 2019 Tax Refund: $2,620
- Average 2020 Tax Refund: $2,879
- Average 2021 Tax Refund: $3,176
If you’re looking to dig in further to some data, check out the IRS individual income tax database.
If you received a refund, put it to good use! Here are the best ways to use your tax refund, in order to get a strong ROI.
And remember, if you’re expecting a large tax refund, you can change your withholding tax with Form W-4 to increase your withholding, and owe more taxes at the end of the year. It may seem counter-intuitive, that sending a check or getting a smaller one is good, but that is the case.
Tax Refund Discussion:
- What was your tax refund this year? Were you happy, sad, indifferent?
- Do you aim to decrease/increase your refund next year?