Even though the government has assured most Americans that they are in store for a tax cut this year thanks to the new law – regardless of their refund situation – not every taxpayer will see payments decrease.
A spokesperson for the Treasury Department on Tuesday told FOX Business in a statement that individual taxes will be lower for “approximately 80 percent of filers” thanks to the Tax Cuts and Jobs Act. Meanwhile, another “roughly” 15 percent of people will see no change, according to the agency. That leaves about 5 percent who will owe more.
As previously reported by FOX Business, taxpayers who could see payments either stagnate or rise under the new tax law are some itemizers – including those who relied on state and local tax deductions – some business owners and certain homeowners.
However, just because your refund is lower – or even if you owe money to the Internal Revenue Service (IRS) for the first time – that does not mean you did not get a net tax benefit as a result of the Tax Cuts and Jobs Act. That benefit could have been reflected in higher take-home pay throughout the year instead of a higher check from the IRS.
More taxpayers were at risk of having their pay underwithheld this year if they did not heed warnings to check withholding amounts. This is the first season Americans are filing under the Tax Cuts and Jobs Act, along with an adjusted withholding structure.
The IRS said the average refund so far during the 2018 filing season is $1,865, compared with $2,035 last year – a decline of 8.4 percent. However, on Monday the Treasury Department said reports of a “reduction” in refunds are “misleading,” and in fact they are consistent with 2017 levels.