My wife and I filed jointly for 2022. Refund of $4,081 for federal & $1,041 for state. 2023: federal: $1900, state $660. Same 22% tax bracket, nearly same income. Why?

[ceb1]

I'm nearly ready to file and I want to be sure I'm not doing anything incorrectly.  We take the Standard deduction, as we did in '22.  We made $10,00 more income than in '22, and stayed in the same tax bracket.  .  Seems a bit shocking that we're looking at about half of the refund that we received last year, when everything is close to being the same.   Have tax laws changed?  Could I be missing something?   Thanks in advance....

[xmasbaby0]

We cannot see your screen, your return or your account.  Have you entered ALL of your 2023 information?  All your income, etc.?  Many tax documents that you need do not arrive until late January or even February, so maybe you do not have it all there yet.

Lots of tax laws changed.  Those changes are resulting in lower refunds for lots of people.

There is no recovery rebate credit (stimulus $) for 2023.  The childcare credit is  less and is not refundable. The child tax credit is different and it is less.    And for some people, earned income credit is different because there is no “lookback” to an earlier year.  Those are some of the reasons your refund may be less.

There are a lot of variables that affect your refund or tax due including how much you earned, how much tax you had withheld, your filing status, the number of dependents you claim, your deductions and credits, etc.  You may have lost Earned Income Credit or the Child Tax Credit— did a child turn 17?  If you received the EIC last year, remember that changes in the amount you earn have a big effect on the amount of EIC you can get. (Sometimes earning more money means less EIC)  Are you 65 or older ?  If so, your standard deduction is higher. Everyone has a higher standard deduction now so it is harder to use itemized deductions.

And…..the child tax credit is very different for 2023    For 2021 you could get $3600 for a child under 6 or $3000 for a child between 6 and 17 even if you had no income/did not work.   That is NOT the way it will work for your 2023 tax return.  The “old” rules are back.   The maximum amount of the child tax credit is now $2000; the refundable “additional child tax credit” amount is $1600.   In order to get that credit, you have to have income from working.  The credit is calculated based on the amount you earned above $2500 multiplied by 15%, up to the full $1600.  If your child is older than 16 at the end of 2023, you do not get the CTC.  But you may still get the non-refundable $500 credit for other dependents instead.

And of course, always check your own data entries, looking for errors such as misplaced decimals or extra zeros.

https://ttlc.intuit.com/turbotax-support/en-us/help-article/tax-refund/refund-go-compared-last-year/...

Print out 2022  and 2023  and compare them side by side to see what is different. 

[VolvoGirl]

Things like income and withholding change.  You would have to compare both years line by line to see what changed.  Then ask about the specific items you don't understand.

[ceb1]

Thanks for the response.  We're empty nesters, and have been for about 6 years.  Our youngest is 27 and is living on his own.  Same tax withheld, same filing status (married/joint return), dependents (just my wife and I).  We made $10,000 more than in '22.....that's THE only difference that I see vs '22.   Seems like our refund should be relatively close to last year, barring any major tax law changes.  Half seems extreme when things are relatively the same, that's why I'm asking.

[VolvoGirl]

Usually more income = more tax = less refund.  Your withholding didn't increase enough to cover the tax due.  Or some credits you got are reduced because you made more income.

And the IRS changed the withholding tables so you got more in your checks during the year instead of a big refund.  Or there are other tax changes. 

[sandstop]

I would suggest that you check your withholding taxes to see if you reduced how much you were withholding in 2023 compared to 2022.  Did you create a new W4?

[ceb1]

No....zero changes to withholding.

[MonikaK1]

As other users have stated in this discussion, there may be several reasons why your refund is less for 2023 than it was for 2022.

You mentioned that you are in the same tax bracket for 2023 as you were for 2022. If your taxable income falls into the 22% bracket, that is actually your "marginal tax rate" - you are taxed at that rate on the portion of your income that falls into that bracket, and the portion under that amount gets taxed at lower rates.

For 2022, married filing jointly, the 22% rate covered taxable income from $83,550 to $178,150.

For 2023, married filing jointly, the 22% rate covers taxable income from $89,451 to $190,750.

The lower brackets also changed for 2023, so the overall calculation has changed.

In other words, your marginal tax rate refers to the tax rate on the last dollar of your taxable income, or the highest tax bracket you fall under. For example, if you're a single filer earning a taxable income of $75,000, your marginal tax rate would be 22% for the 2023 tax year. See this tax tips article for more information.

If you made $10,000 more in 2023 and didn't increase your withholding from 2022, this may explain most of the change in your refund. You can adjust your withholding to add an additional amount per pay period if needed to cover the increase for next year.