Detailed Findings & Methodology
On the whole, states where the federal government collects more in taxes per return also tend to receive the largest average refunds. Six of the 10 states with the highest average tax refunds are among the top 10 for total federal tax collections per capita from that state. In the 10 states with the smallest average return, federal tax collections per capita fall below the average of $10,316 per state resident.
By far, the greatest determinant for the size of the typical tax return is income, as income taxes account for the largest share of federal tax refunds, at 86% of all federal refunds last year. In some states, income tax refunds accounted for over 95% of total federal refunds.
Of the 15 states with the lowest average tax return, only three have a median household income higher than the national figure of $57,617. Of the 15 states with the highest average tax returns, nine have median household incomes greater than that of the typical U.S. household.
State taxes can be itemized as deductions, and higher tax collections on the state level contributes to state differences in the average refund size. The states with higher state and local tax collections per capita, on the whole, also tend to have higher average returns.
To determine the average tax refund in every state, 24/7 Wall St. reviewed the 2016 IRS Data Book for the total number of refunds issued in each state, then used the total amount refunded in each state to calculate the average tax refund. The state figure which includes total filings receiving refunds includes not just individual income tax returns, but all filing documents, including corporate taxes, estate taxes, and more. The refund rate for individual income taxes is much higher in these states.