With Tax Day next week, average refunds top $3,500

There’s just about one week left until the close of this year’s tax season, with returns due April 15.

So far, the average tax refund amount is 11.1% higher than a year ago, totaling $3,521, according to Internal Revenue Service data for the week of March 27. That’s left filers with an average boost of $351 compared to a year ago amid new and expanded deductions via the One Big Beautiful Bill Act. Consumers are also facing higher gas prices and using their refunds for everyday essentials, like rent and groceries, which could eat away at gains.

The government, meanwhile, has received fewer returns than a year ago. As of March 27, the IRS has processed 87.5 million returns, compared to 88.5 million the same week last year. But the total number of refunds is up 2.2%, hitting nearly 63 million.

Read more: 4 ways the One Big Beautiful Bill Act could lower your taxes

Many households say they’re using their refunds to either solve an immediate financial problem or prevent the next one, according to Lending Tree survey data.

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, said 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.