The IRS Issued 12 Million Tax Refunds for 2020: Here's Why

An unemployment tax break caused the IRS to issue $14.8 billion in tax refunds to 12 million people.

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The IRS has finished correcting millions of 2020 tax year returns—a process that resulted in the agency issuing 12 million tax refunds averaging $1,232 each, for a total of about $14.8 billion. The IRS corrected the tax returns because of a change in the American Rescue Plan Act of 2021 that provided a tax break of up to $10,200 of unemployment compensation for individuals with modified adjusted gross income less than $150,000.

The tax break was designed to help the millions of people who were laid off or lost jobs during the COVID-19 pandemic and received unemployment benefits as a result. But because of the timing of the enactment of the American Rescue Plan Act, many people, who had received unemployment aid during 2020, had already filed their 2020 federal tax returns without the benefit of the unemployment compensation exclusion.

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Kelley R. Taylor
Senior Tax Editor,

As the senior tax editor at, Kelley R. Taylor simplifies federal and state tax information, news, and developments to help empower readers. Kelley has over two decades of experience advising on and covering education, law, finance, and tax as a corporate attorney and business journalist.