How Americans are spending their tax refunds

Tax refund season can feel like a rare financial exhale. But for many Americans, that money isn’t extra cash — it’s a lifeline.

This year, over a third of tax filers say they plan to use their refund to cover groceries, rent, bills, debt payments, or savings, according to LendingTree survey data. This year, the money is largely earmarked for financial necessities, not splurges.

Tax refunds are becoming a bigger part of how many households make the numbers work.

Robert Jackson, 33, works as a server at two restaurants in St. Petersburg, Fla. As the father of three children under 10, he says his refund is essential to financing larger purchases and expenses he otherwise couldn’t afford.

“The last few years, we’ve used it to cover moving expenses,” Jackson said. “It was the only way I could pay first and last month’s rent, the deposit, all the other costs that go along with moving.”

This year, he’s putting it toward a down payment on a car.  “Being able to get the car is a big deal — surviving on one car isn’t practical anymore,” he said. “It was necessary, but pretty much my entire refund went to that.”

According to the LendingTree survey data, nearly half of filers (46%) say they’re relying on getting a refund this year. That’s up from 42% last year and 40% in 2024.

For many households, including Jackson’s, tax refunds have shifted from a nice-to-have to something closer to a financial backstop.

“I feel like I’m paralyzed half the year, waiting on these taxes to come in,” he said.

Two-thirds of filers say their refund is very or somewhat important to their financial situation, and more than half say they’d need to spend it within a month of receiving it.

“Refund time has always been a survival thing — I need food, I need to move, I need to pay the rent,” Jackson said. “Most people I know are in that same situation to some degree.”

The groups most likely to say they’re relying on a refund are also under the greatest financial pressure: younger adults, parents with children under 18, and lower-income households.

But the reliance isn’t limited to families struggling to make ends meet. Even among households earning $100,000 or more, 70% say their refund still matters to their overall financial picture.

Read more: Where’s my refund? How to check your tax return status.

Many households say they’re using their refunds to either solve an immediate financial problem or prevent the next one.

Among surveyed filers, 34% said they planned to use at least part of their refund for everyday expenses such as groceries, rent, or bills. That was especially common among lower-income filers, millennials, and parents with young children.

If a refund helps cover necessities without forcing you to run up a credit card balance, fall behind on rent, or juggle bills, that money is doing exactly what it needs to do.

At the same time, it underscores a harder truth: For many households, monthly income alone isn’t leaving enough margin, says Patrick Yaghoobians, a certified financial planner and founder of Noor Financial Services.

“Many people are facing increased financial pressure right now,” he said.

However, Yaghoobians and other experts say that setting aside even a small percentage of your refund — say 5% — can add up and make a meaningful difference down the road.

“It can build momentum, making it easier to stay on track with the rest of your financial goals,” he added.

Another 34% of survey respondents said they’d use their refund to pay off debt.

That’s one of the smartest places a refund can go, especially if the debt is on a high-interest credit card, said Yaghoobians.

Paying down expensive revolving debt can lower the amount you owe in future interest payments, free up room in your monthly budget, and reduce the risk that one emergency expense turns into a longer financial spiral.

Learn more: 4 ways to increase cash flow and pay off debt faster

Savings came in close behind the other top categories, with 32% of filers saying they’d put at least part of their refund into savings or an emergency fund.

That move may not offer the instant relief that paying a bill does, but building a cash cushion is vital, especially for working families with kids, said Scott Oeth, CFP and principal at Cahill Financial Advisors in Minneapolis.

“Any time you’re receiving a lump sum of money, such as a bonus, inheritance, or tax refund, I think it’s important to make a plan for how you want to use those funds, and, importantly, how you should use those funds,” he said.

Without a plan, Oeth said it’s easy for your refund windfall to slip away or be spent on impulse purchases.

Most experts recommend saving three to six months of living expenses, but even a modest emergency fund can make a real difference.

A split strategy can also work. If you’re debating between paying down debt and saving, you don’t necessarily have to choose one or the other. For many households, the best strategy is to allocate the refund across several financial goals.

Some taxpayers may see larger refunds this filing season.

For the week ending March 6, 2026, the IRS reported that the average refund amount was $3,676, up 10.6% from the same point last year.

One reason some filers may see larger refunds is due to newly implemented tax changes signed into law under the One Big Beautiful Bill Act.

For the current filing season, the IRS highlighted several new or enhanced deductions tied to the legislation, including an added deduction for:

Eligible seniors

Qualified tips

Qualified overtime income

Expanded state and local taxes (SALT)

Some new car loan interest

In general, deductions lower taxable income, which can reduce a filer’s tax bill and, in some cases, increase the size of a refund.

Still, a higher average refund doesn’t mean everyone is getting more back. Your refund depends on your income, withholding, credits, deductions, and filing status. Some people will get more; some won’t.

Read more: Tax refunds up nearly 11%, with over 37 million Americans cashing in on new tax breaks

A bigger refund can feel like a win. But it might not actually be the best move for your finances.

In some cases, a large refund is a signal that too much tax was withheld from your pay during the year. That means you gave the government more than you needed to, then waited until tax season to get the excess back.

That can lead to missed opportunities throughout the year, said Oeth. “Those dollars could have been accruing interest for you in a high-yield savings account,” he explained.

Still, getting a sizable refund isn’t always a bad thing. For some people, the forced-savings effect is useful. If you struggle to set money aside throughout the year, a refund may be one of the only times you get a meaningful lump sum.

But from a money-management standpoint, an oversized refund can mean you had less take-home pay — that’s money you could have used to pay for essentials or tackle debt all year, not just at tax time.

The IRS encourages taxpayers to review their withholding by using the agency’s Tax Withholding Estimator.

Read more: Withholding tax: What is it, and how can I check or change it?

The best way to use your refund depends on what’s hurting your finances most right now.

If you’re carrying high-interest credit card debt, your refund can be a powerful tool for cutting future interest costs and improving monthly cash flow.

“Finding a good budgeting tool that you’ll use consistently to help manage bills and evaluate spending can make a huge difference,” suggested Oeth.

If your bills are under control but you don’t have an emergency fund, building one up with that extra cash is a smart move.

“Small steps can help build momentum and create better financial habits over the long run,” Yaghoobians said.

And if your essentials, debt, and savings are in decent shape, then you can think more strategically. Maybe your refund goes toward retirement, a sinking fund for irregular expenses, or a specific financial goal you’ve been putting off.

Read more: Tax refunds are bigger this year. Here are 5 smart ways to use yours.

The IRS says most refunds are issued in fewer than 21 days when you e-file and choose direct deposit. But some returns take longer if they need additional review, have errors, or are flagged for possible identity theft or fraud.

You can check your refund status by using the IRS Where’s My Refund? tool, the IRS2Go app, or your IRS online account. The IRS says status information is generally available 24 hours after you e-file a current-year return or four weeks after filing a paper return.

There’s no single type of filer who always gets the biggest refund. In general, larger refunds often go to taxpayers who qualify for valuable tax breaks and refundable credits, such as the Earned Income Tax Credit and the Additional Child Tax Credit.

They may also go to taxpayers who claimed deductions that lowered taxable income more than expected. But refund size still varies widely based on income, withholding, and household size, as well as the credits and deductions you claim.