Changes That May Affect Your Tax Refund

Tax laws can change every year, and these changes may significantly impact your tax refund. Whether you’re anticipating a larger return or worried about owing more, staying informed can help you prepare for the filing season. Here are some key factors that might affect your tax refund this year.

Adjustments to Tax Brackets

Tax brackets often shift due to inflation, which can alter how much of your income is taxed at each rate. If your income has increased, you might move into a higher tax bracket, potentially reducing your refund. Conversely, if inflation adjustments lower your taxable income, you might see a boost in your refund.

Expanded Tax Credits

Changes to tax credits can also impact your refund. For example, the Child Tax Credit and Earned Income Tax Credit are periodically adjusted. If credit amounts increase or if eligibility criteria broaden, you might qualify for a larger refund. On the other hand, if credits decrease or revert to previous levels, your refund could be smaller.

Deduction Limitations

Some deductions, like those for medical expenses, mortgage interest, or state and local taxes (SALT), may have new caps or phaseouts. If you rely on these deductions to reduce your taxable income, changes to their limits could affect your refund.

Withholding Adjustments

If you adjusted your paycheck withholding during the year, your refund might differ. Increasing withholding often results in a larger refund, while reducing it could lead to a smaller one—or even a tax bill.

Prepare for the Unexpected

Tax changes can catch anyone off guard. To maximize your refund, consult a tax professional or use trusted tax software to stay ahead of these updates. By understanding how changes affect your finances, you can file your taxes with confidence and avoid unpleasant surprises.

Staying proactive is key to optimizing your tax situation!

Don’t miss important tax deadlines! Staying ahead of tax due dates is crucial to avoiding penalties and ensuring smooth financial planning. Contact us today for assistance in keeping your taxes on track, including key deadlines for personal taxes, corporate filings, and quarterly estimates: (877) 205-2565.