Stimulus Update: IRS Data Shows Smaller Checks Are Coming This Year. Is It Because of Stimulus Changes?

Could a lack of 2022 stimulus checks be causing Americans to get smaller IRS checks?

The 2022 tax season is well underway, and the IRS recently released some important data about how Americans are faring this year.

Specifically, the tax agency's filing season statistics ending the week of March 24, 2023 show that the average refund amount is considerably smaller this year than it was last year. The IRS had warned this was likely to be the case this year, in large part due to the fact that the federal government did not authorize stimulus checks in 2022.

Just how much less are Americans getting this year in their bank accounts or sent via mail from the IRS? Here's what you need to know.

Here's how much lower refund checks are this year

According to the IRS data for the week ending March 24, 2023, the average tax refund sent out this year to tax filers is $2,903. While this may sound like a generous sum, the average refund the prior year was $3,263 when the data was released for the week ending March 25, 2022.

This means the average refund amount is down 11% this year compared to the same time last year -- which is a very substantial decline. In fact, the IRS has sent out only $172.263 billion in refunds in 2023 compared with $188.687 billion last year -- despite sending out a higher total number of refunds to date (59,342,200 compared with 57,830,000).

Why stimulus changes mean refund checks are lower

Changes to stimulus policy have been a big contributing factor to the reduced refunds this year.

The refunds coming now are for the 2022 tax year, during which the federal government did not provide any stimulus funding. By contrast, in 2022 when taxpayers were getting refunds for the 2021 tax year, several types of federal stimulus had been made available in 2021 including a $1,400 payment for adults and dependents authorized by the American Rescue Plan Act as well as an expanded Child Tax Credit that provided parents as much as $3,600 per child.

The American Rescue Plan Act resulted in many Americans receiving larger refunds because many people could claim both the $1,400 stimulus payment when filing their returns as well as the expanded Child Tax Credit.

Americans were eligible to claim the $1,400 if they didn't receive the advance payment earlier in the year. And only half the expanded Child Tax Credit was sent out prior to tax time -- in monthly installments from July through December -- so anyone eligible could claim the other half (or the full amount if they didn't receive the advance payments).

Without these and other extra tax credits made available by stimulus legislation, Americans are getting far less back, so it's not a surprise that there's been a huge drop in the average refund. Of course, many people are still getting a significant sum refunded and should make sure to use this money wisely to pad an emergency fund or accomplish other financial goals when possible.