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Tax refunds tank travel plans for some

It’s making headlines. Tax refunds. They will be, on average, 8 percent lower this year. That’s because tax rates are becoming more accurate — bad news for businesses that rely on folks spending their tax refunds on big ticket items like TV's and vacations.

PORTLAND, Maine — So, first things first. Why could you see a smaller refund check this year?  It has to do with the new and improved accuracy of the tax withholding table; it was changed to reflect lower tax rates.

"This year, because the withholdings were a little less, the paycheck was 20,30,50 dollars more, because less tax was being withheld meant that you get that much less back when you actually file your return and request a refund," said Cory Vargo, tax partner at WIPFLi in South Portland. 

Here's the bad news for business: "that means that any boost that a business would see at tax refund time is probably going to be muted," Vargo said. 

That’s worrying to Dube’s Travel agency based in Auburn and South Portland. The end of February and beginning of March is peak season for folks looking to spend their tax refund checks on a vacation.  

"Tax refunds aren’t going to be as big, so people are going to be doing shorter trips, generally they book for a week, maybe they’ll book for 4 or 5 days, maybe 3 just to be able to get away," said Terry Carpentier, leisure travel expert for Dube. 

The smaller refund isn't just hurting the travel agency’s bottom line,  it impacts the entire travel industry.

"The less money people have, the less money they spend, the less people are visiting hotels, or even travel within the United States," said Carpentier. 

Agencies like Dube hope that travelers adjust and look to the year ahead.

"If they get a lower tax refund, that they start planning for next year as opposed to this year, cause we can start booking a year ahead of time or a year and a half ahead of time," said Carpentier. 

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