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Due to the new tax laws and changes this year, tax season can be even more stressful than usual for some. To better help you navigate them, we have looked into the new changes a bit to give you a historical look at refunds and bills.
Historical knowledge and help predict future trends
Understanding how tax bills and refunds have changed historically can better prepare you for the future. These changes can come from an increase or decrease in the general wealth of the consumers. It can also change due to tax rules and laws changing to better conform to what is needed. This is especially true when tax laws are changing in a way that could adversely affect your ability to not only pay your taxes but may also result in no refund.
Everyone pays taxes, but just how much are we paying?
Throughout the year, everyone pays some form of taxes, be it sales tax, income tax, or property tax. Most of it is just something that we pay during the course of our day and don’t think much of. However, Credit Sesame wanted to know how much you, as consumers, are paying each year. The numbers were surprising.
Average Historical Tax Bill 2011-2019
| Year | Average Tax Bill |
| 2019* | $14,770 |
| 2018 | $13,854 |
| 2017 | $15,343 |
| 2016 | $14,760 |
| 2015 | $14,129 |
| 2014 | $13,414 |
| 2013 | $13,191 |
| 2012 | $12,754 |
| 2011 | $12,576 |
| 2010 | $12,558 |
Source: Historical data from IRS.gov. Current data from a survey of 1500 consumers between January 31, 2019, and March 15, 2019.
*This number is anticipated by experts for 2019.
As you can see, the consumer’s average tax bill has been steadily rising over the last 11 years. It is anticipated that in 2019 consumers will pay more than $14,000 on taxes.
Getting a refund back? How does it compare to historical averages? (H3)
Now that we know how much an individual pays towards taxes every year, Credit Sesame wanted to see how much of that was returned in the form of tax refunds. While, on average, the taxpayer does receive some money back every year, the amount is only a portion of what is paid in every year.
Average Historical Tax Refund 2011-2019
| Year | Average Tax Refund |
| 2019* | $3,068 |
| 2018 | $3,046 |
| 2017 | $2,825 |
| 2016 | $2,857 |
| 2015 | $2,793 |
| 2014 | $2,952 |
| 2013 | $2,651 |
| 2012 | $2,803 |
| 2011 | $2,913 |
| 2010 | $3,003 |
Source: Historical data from IRS.gov. Current data from a survey of 1500 consumers between January 31, 2019, and March 15, 2019.
*To date of survey, so the number may fluctuate as consumers have until April 15, and October 15 with extension.
While on average the return is low, when we looked at the generational return rate, the numbers fluctuate much more.
Generational Tax Returns? (H3)
Not all tax returns are created equally. Previously, we discussed, on average, how much the typical surveyed individual received. We wanted to dig a little deeper and see how returns were different, if they were, across different generations.
Average tax refund amount by generation
| Generation | Average Tax Refund |
| Generation Z | $3,703 |
| Millennial | $2,565 |
| Generation X | $2,021 |
| Baby Boomers | $5,403 |
| Silent Generation | $1,648 |
Source: Survey of 1500 consumers between January 31, 2019, and March 15, 2019.
The numbers range from the Silent Generation, who only received on average $1,648, to the Baby Boomers who, on average, saw a $5,403 return. The Silent Generation are individuals who are primarily retired and therefore their tax bill, and therefore tax refund, are both much lower than other generations. Baby Boomers on average have property, may still be paying student loans, and are at the stage in their life when they are retiring. All of these things provide increased refunds, in the way of tax deductions. Generation X have children that are still living at home or entering college, which provides some tax relief. Millennials own homes, pay property tax, pay student loans, and are working. The individuals in Generation Z that get the largest tax benefit are those with children living at home, who are paying student loans or are working students.
What are people really using their tax refunds on?
In a previous article, we asked individuals how they spent their 2018 tax refund. Now that refunds are being issued, we reached out again to see if how the money was being spent this year. The numbers weren’t drastically different from last year. What the differences do show is more individuals are considering how tax refunds can affect their financial wellbeing. It also shows that money is being used to help the consumer. A lower percentage than last year spent their money on frivolous expenses.
What people are actually doing with their tax refunds once they receive them
| Expense | 2018 Tax Return | 2019 Tax Return* |
| Pay down debt | 34% | 34% |
| Savings | 41% | 50% |
| Everyday expenses | 25% | 22% |
| Major purchase | 9% | 9% |
| Home improvement | 9% | 10% |
| Splurge | 9% | 9% |
| Vacation | 12% | 12% |
| Other | 4% | 3% |
Source: Survey of 1500 consumers between January 31, 2019, and March 15, 2019. *To date of survey, so the number may fluctuate as consumers have until April 15, and October 15 with extension.
As you can see, consumers are, by a large margin, spending their tax refunds on things that will benefit them financially in the future. Paying down debt and saving money are both great ways to set yourself up for future financial success. Even if you are one of those individuals who splurged a little, it’s okay, it is after all your money.
Conclusion & Summary
Every tax year has people worried if they paid enough taxes throughout the year and/or if their refund will be big enough to pay for something. As we have shown, on average refund rates are relatively low, while tax payments are much higher. Consumers seem to have carried through on their plans to use their refunds relatively responsibly.
