After weeks of worry, Americans' tax refunds are finally trending up
- The average tax refund amount was down significantly from last year during the first three weeks of the 2019 tax season.
- Democratic lawmakers blamed the GOP tax-cut law for the decrease and many Americans expressed outrage online about receiving smaller refunds
- But the latest IRS data reported that the average refund is now up 1.3% compared to 2018.
After three weeks of hand-wringing, some Americans got good news about the size of their tax refunds.
Internal Revenue Service (IRS) data from the first three weeks of the tax season showed that the size of the average tax refund was down significantly compared to the same time periods in 2018. In fact, after the third week of the 2019 tax season - which ended February 15 - the average refund was just $2,640 compared to an average refund of $3,169 through the first three weeks of the 2018 filing season, a 17% decrease.
But new data from the IRS, released Thursday showed that the size of the average tax refund issued has not only caught up to 2018, but surpassed it.
The average tax refund through the first four weeks of the tax season was $3,143, according to the data, up 1.3% from the $3,103 average refund over the same time period in 2018.
The increase, according to the Treasury Department, was due to delayed payments from two key tax credits.
"As previously stated, the increase in the weekly data is primarily due to the remainder of the Earned Income Tax Credits and Child Tax Credits being paid out this week," the Treasury said in a statement.
"Despite the higher refund average, we remind taxpayers that weekly filing season data is variable and will continue to fluctuate. We caution against drawing broad conclusions on refunds overall this early in the filing season."
The drop in refund size frustrated many Americans with some blaming the tax reform law, known as the Tax Cuts and Jobs Act, which was supported by President Donald Trump and Republicans. In fact, people started to use the hashtag "#GOPTaxScam" when bemoaning the smaller refunds.
While the size of a refund is not indicative of the amount that a filer pays in federal taxes, some Democratic lawmakers - including House Speaker Nancy Pelosi - also blamed the TCJA for the shrinking refunds.
"Once again, American families are feeling the reality behind the empty promises of the GOP Tax Scam," Pelosi said on February 11.
But analyses show that a large majority of Americans saw a decrease in their overall tax burden for 2018 and any potential drop in a tax filer's refund was likely due to regulatory adjustments on how much employers were instructed to withhold from employees paychecks.
According to Daniel Silver, an economist at JPMorgan, the catch-up in the average refund size is encouraging given the past weeks' data but not a huge win for the GOP tax law.
"It is a very favorable development for consumption to see refunds more in line with past years' experience after seeing the significant lag in the data prior to the latest daily report," Silver wrote in a note to clients on Thursday.
"But if refund issuance is simply in line with that of recent years, this could be viewed as a disappointment given some expectations that the Tax Cuts and Jobs Act would lead to a jump in refunds this year."