Probability of Getting a Tax Refund

The IRS reports that approximately 73% of individual tax returns result in a refund. In the 2023 filing season, about 101 million refunds were issued out of about 143 million individual tax returns filed. The average refund was approximately $2,800, with the total amount refunded exceeding $280 billion.

Tax refunds result from withholding more tax from paychecks than is actually owed, or from claiming refundable tax credits such as the Earned Income Tax Credit (EITC) and the Child Tax Credit. About 25 million filers claim the EITC, which can provide refunds of up to $7,430 for families with three or more qualifying children. The Child Tax Credit provides up to $2,000 per qualifying child.

Financial experts generally advise against large refunds, as they represent an interest-free loan to the government. Adjusting W-4 withholding to more closely match actual tax liability allows that money to be invested or used throughout the year. However, many Americans view their tax refund as a forced savings mechanism and the largest single payment they receive all year. The most common uses of tax refunds include paying down debt (about 35%), saving (about 30%), covering everyday expenses (about 20%), and major purchases (about 10%).