Purdue Professor Says Refunds Will Increase This Year
WEST LAFAYETTE, Ind — With Tax Day coming up on April 15, many people filing their returns are seeing larger refunds this year. A Purdue University professor says several small changes in federal tax rules are behind the increase.
Larissa Adamiec, a clinical associate professor in Purdue’s College of Health and Human Sciences, said most taxpayers will notice “a 10 to 11 percent increase in their tax refund.” She said the bump stems from mistakes in last year’s withholding tables that caused many workers to set aside more money than they needed. A higher standard deduction also played a role.
“We’ve seen the standardized deduction move from about $15,000 to roughly $16,000,” Adamiec said. “As a result, we’re starting to see better refunds for individuals.”
She said new rules affecting tips and overtime pay are also helping workers in service and hourly jobs. Tips aren’t being taxed the same way they were last year, and overtime wages are seeing similar adjustments. Adamiec said the changes benefit taxpayers but make filing “slightly more complicated.”
The larger refunds are already shaping how people spend. Adamiec said many households use the money to catch up on delayed expenses, while others treat it as extra cash.
“It’s a mental accounting thing,” she said. “People get very excited about this money and will go ahead and purchase things they don’t necessarily need but have been looking forward to.”
She expects that bump in spending to last for about 30 days after refunds go out.
Processing times may be slower this year. Adamiec said the IRS workforce has shrunk and paper checks are being phased out, which means some refunds will take longer to reach taxpayers.
