IRS cleared backlog of tax returns, leading to decreased tax refunds and a $22 billion U.S. federal budget deficit in January, matching a record-breaking month's receipts.
Compared to January 2023, deficit this month was $17 billion less, with receipts increasing 7% to $477 billion and outlays increasing 3% to $499 billion.
Deficit increased by $72 billion in the first four months of the fiscal year due to increased expenses for Social Security, Medicare, military programs, and servicing the national debt.
The Treasury Department announced on Monday that the Internal Revenue Service (IRS) cleared a backlog of tax returns delayed by the epidemic, which led to a decrease in tax refunds. As a result, the U.S. federal budget deficit dropped precipitously to $22 billion in January, matching a record-breaking month's receipts.
(Photo : by SAUL LOEB/AFP via Getty Image)The Treasury Department announced on Monday that the Internal Revenue Service (IRS) cleared a backlog of tax returns delayed by the epidemic, which led to a decrease in tax refunds.
Compared to January 2023, when there was a $39 billion deficit, the deficit this month was $17 billion, or 43% less. While receipts increased 7% to $477 billion, outlays increased 3% to $499 billion for the month.
The $36 billion rescue of a Teamsters union pension fund in January 2023 also had a major role in this January's contrast with last year, since no such big one-time expenditures were reported this year.
The deficit increased by $72 billion, or 16%, to $532 billion in the first four months of the fiscal year due to increased expenses for Social Security, Medicare, and military programs as well as the costs of servicing the national debt.
The Treasury said that both receipts and outlays for the period were new highs, with outlays up by $184 billion, or 10%, to $2.117 trillion and receipts up $112 billion, or 8%, to $1.585 trillion.
Deducted from revenues, individual tax refunds were $15 billion less in January 2023 than they were in the previous year. This past year, the IRS implemented new scanning technology to expedite the processing of paper returns. Benefiting from robust job trends, individual withheld receipts increased by $20 billion, or 7%, in January compared to the previous year.
However, the higher weighted average interest rate-which is currently at 3.15%-as well as the greater levels of public debt caused the Treasury's interest expense on the public debt to increase by $18 billion, or 35%, in January over the same month last year. Debt interest costs increased by $96 billion, or 37%, to $357 billion thus far in the fiscal year, surpassing Medicare spending.
The Treasury also disclosed increased military program expenses because of the money spent on maintaining and operating military personnel.
This rise in military spending reflects various strategic and operational needs, including technological advancements, personnel training, and operational readiness initiatives amidst evolving global security challenges.
The amount for the first four months of the 2024 fiscal year was $32 billion higher, or 13%, at $283 billion.
