Taxpayers can expect to see smaller returns from taxes this year.
The primary reason for these lower refunds is the winding down of the extra money given to people during the pandemic.
Greg Geisler is an accounting professor at IU and he says this is a big deal.
“Most people got their 2021 stimulus check through the mail, but some people got it, and it was worth $1,400, through their tax return. So that added another 1,400 to their refund last year. There were no such stimulus checks in 2022,” Geisler says.
Additonal changes to this year's taxes include a decrease in the Child and Dependent Care Credit and the expiration of the increase in the child tax credit from 2021.
Despite rising inflation in recent months, it will not have an impact on taxes.
"Economically, inflation's bad news because you have to pay higher prices, but from a tax perspective, thank goodness, a lot of these individual tax rules are indexed for inflation every year. That means your taxes won't go up as much, compared to if standard deduction and the tax rate schedule were not indexed for inflation," Geisler says.
Geisler says that 2023 will bring more consistency and the 2024 tax season will be less of a shock to taxpayers.