Fact Finders: Why your tax refund could be bigger
TUCSON, Ariz. (13 News) - Tax day is now behind us, and you may be waiting for that refund check to show up. If you’re lucky, maybe it already has. Many Arizonans will get a pleasant surprise when they open it: more money. If your refund check looks larger this year, there’s a reason for that. For many, that refund will be even bigger next year.
This is because of a rate cut to the individual income tax for Arizona. For 2022, that’s 3%. For most filers, that falls to 2.5% in 2023 and beyond. It’s not exactly a flat tax, but close. Under it, low-income taxpayers will see little change. Middle-income households may see a 10% reduction, while the wealthy could see a 40% cut.
Arizona State University economist Dennis Hoffman told the 13 News Fact Finders that happening this spring, you may also notice lower withholding rates in your paycheck.
“The withholding rates that they withheld taxes against their income did not come down last year so that put many in a position where they are over withheld for this particular tax year,” Hoffman said.
Hoffman also pointed out a downside: the tax cut means less money available for schools, public safety, and social programs. That could become particularly evident during an economic downturn, like what analysts forecast for later this year or next. So, you might want to turn that refund into a rainy day fund.
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