Overview of Tax Refund Growth#
Recent data from the IRS indicates that tax refunds are experiencing significant growth this season. According to DA Davidson's weekly analysis, total refunds have increased by 12.0% in the first six weeks compared to the same period last year.
Steady Increase in Refunds#
The growth rate has remained consistent, with a cumulative increase of 10.9% noted last week. This trend suggests that this tax refund season could be the largest since at least 2013. In the most recent week, the number of refunds issued rose by 7.4% compared to the same week last year.
Average Refund Amounts Rising#
The average refund amount has also seen a notable increase, rising by 13.0% to $3,277 compared to the previous year. Additionally, the total refund dollars for the week surged by 21.4% year over year, a significant jump from the 8.6% increase recorded the week before.
Implications for Retail Spending#
DA Davidson closely monitors IRS tax refund data to understand spending patterns, particularly among lower-income customers who tend to spend their refunds quickly. This information is crucial for retailers catering to this demographic, such as Walmart, Grocery Outlet, and auto parts retailers. However, the firm cautions that it is still early in the refund season to draw definitive conclusions about overall growth compared to previous years.