About 2.7 Million Fewer People Got Tax Refunds After Law Change
(Bloomberg) -- About 2.7 million fewer people got tax refunds this year under the tax law overhaul that altered rates and paycheck withholding starting in 2018, according to new figures from the Internal Revenue Service.
The IRS estimates it sent about 113.4 million refund checks to taxpayers, down from 116 million sent a year earlier for tax returns for 2017, before the massive overhaul took effect, according to agency data released Thursday.
President Donald Trump signed the $1.5 trillion tax-cut law in December 2017, his first major legislative victory.
The 2.3% decline in refund checks illustrates a sore point during last spring’s tax filing season as many taxpayers expected to see benefits from the law, which cut tax rates, boosted the child tax credit and increased the standard deduction.
About 80% of filers received a tax cut under the new law, but changes in withholding rates meant that many got the tax cut in small chunks in their paychecks throughout the year, rather than in one large check after filing their tax return.
The Treasury Department twice announced penalty relief for taxpayers this spring who were expecting a refund but instead discovered they owed taxes.
“As individual taxpayers adjust to these tax law changes over time, the projected refund volumes are expected to return to the historically observed trend,” the IRS said in a report released with the data.
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