The Biggest and Smallest Federal Tax Refunds By State

IRS paperwork, pen, glasses
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Who among us doesn’t want someone to come along and hand us a few thousand dollars every once in a while? The Internal Revenue Service does just that each year when taxpayers file their returns and wait to collect any refunds that are due to them. The average federal refund was $2,895 in 2017, the last year for which the Internal Revenue Service has released such data.

The map below shows a breakdown by state with the biggest and smallest refunds.

Pros and Cons of Receiving a Refund

What many people forget is that a tax refund is really just their own money. No one is "giving" them anything. Issuing a refund is simply the Internal Revenue Service’s way of saying, “Oops. You paid too much in withholding or estimated taxes last year. So here you go—we’re returning that money to you. And thanks for letting the government use it for the year. Sorry, no, we don’t pay interest.”

It all works out to a walloping loan to the government made by U.S. citizens: Overall, the IRS sent out $324 billion in refunds to taxpayers in 2017—money it got to sit on for at least some portion of the year before refunding it.

Of course, you want your money back, and it’s better to be safe than sorry. You don’t want to underpay all year or the IRS will have its hand out to collect a tax liability from you come April. It can admittedly be a bit of a balancing act.

10 States With the Smallest Refunds in 2017

That said, where does your state rank for the size of average federal tax refunds received by its taxpayers? Here’s a hint: If your state borders Canada, you’re probably collecting less than many of your southern neighbors. Eight of the states with the lowest average refunds border our neighbor to the north:

  1. New Hampshire: $2,527
  2. Michigan: $2,491
  3. Ohio: $2,489
  4. Idaho: $2,433
  5. Minnesota: $2,432
  6. Montana: $2,367
  7. Wisconsin: $2,353
  8. Vermont: $2,348
  9. Oregon: $2,342
  10. Maine: $2,302

10 States With the Biggest Refunds in 2017

The states with the top refunds all exceed the national average of $2,895, even if by just a couple of dollars. Florida squeaked onto this Top 10 list at just $2 over the average:

  1. Texas: $3,133
  2. Oklahoma: $3,088
  3. Louisiana: $3,073
  4. New York: $2,986
  5. Connecticut: $2,958
  6. Mississippi: $2,953
  7. New Jersey: $2,943
  8. District of Columbia: $2,904
  9. North Dakota: $2,896
  10. Florida: $2,877

These numbers don’t include corporate taxes, business taxes, or estate taxes. Nor do they include returns filed for incomes earned by estates or trusts, or gift tax returns. 

Is it Worth Moving?

Only Texas, Oklahoma, and Louisiana averaged more than $3,000 per refund, and in many cases, the differences between some states with the biggest refunds and those with the skimpiest refunds are pretty negligible.

For example, in Florida—which ranks 10th overall—the average refund was $2,897. Meanwhile, New Hampshire ranks No. 41 overall with an average refund of $2,527. That’s a difference of just $370. It’s still money you’d rather spend on yourself than give to Uncle Sam, but overall, it might not be worth the cost of hiring a moving van.

The difference between the top state—Texas at $3,133—and the lowest state—Maine at $2,302—works out to $831.

State-Level Income Taxes

Of course, it bears mentioning that two of the states receiving top refunds—Texas and Florida—don’t impose a state-level income tax, so this gives those residents an even greater advantage. The other five states without state-level income taxes all fall somewhere in the middle of our list when it comes to federal tax refunds. They’re Alaska, Nevada, South Dakota, Washington, and Wyoming.

Where These Numbers Come From: The Methodology

No, the IRS isn’t wasting your tax dollars by paying employees to calculate these averages. What the agency does do, however, is provide the total amount of refunds per state and the number of refunds issued to the taxpayers who live there. The rest is simple math. SmartAsset did the division based on 2016 data.

While California residents ranked in the most significant total tax refund dollars overall—$38.4 billion—the state doesn’t make the top 10 list of highest average refunds because so many people live there. That total refund amount was divided by 13,651,511 federal tax returns.

Most of the states on the list of the smallest average refunds have comparatively smaller populations. The math would nonetheless be the same, so maybe fewer multimillionaires live there, or maybe their residents are just smarter about not using the IRS as an interest-free savings account. They complete their W-4 forms so accurately that they don’t end up giving the government any more than they have to over the course of the tax year.