3 Reasons Why Your tax refund might be smaller in 2023

It’s no secret that 2022 was an unpredictable and challenging year for many people around the world. And when it comes to taxes and filing for a refund, this year has posed some unique challenges as well. While it’s too soon to predict precisely what changes 2023 and beyond may bring, there are some indications that your tax refunds may be smaller in 2023 if you don’t make proactive adjustments now.
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​​Here are 3 reasons why:

1. Tax Bracket Changes: It is likely that your income will fluctuate depending on the economic situation of 2021, which means your tax bracket could change significantly next year if it takes a downwards turn. This could cause your refunds to be substantially lower if you do not keep track of changing tax laws and adjust accordingly throughout the year.

2. Interest Rates: If interest rates remain low throughout 2021 and 2022, then it is possible that the federal income tax deductions you receive will also decrease significantly next year, resulting in smaller-than-expected returns once tax season arrives.

3. Tax Credit Reduction: The COVID relief package includes measures such as increasing the child tax credit and expanding eligibility for other credits next year, however those measures are only temporary meaning those upfront payments will get reduced or eliminated completely when 2023 rolls around.  

Although predicting precisely how much smaller your refunds might be can be difficult without exact figures from the government or an accountant at hand, one thing is certain – you should take action now if you want to ensure larger refunds in 2023.

Consider reviewing all of your sources of income over the past two years and plan ahead by consulting with an experienced financial advisor who can help you prepare before filing next year's taxes. Doing so will definitely increase the chances of getting a higher refund than expected!