Americans are getting bigger tax refunds this year, and many are now deciding how to use that extra money. The U.S. Treasury Department said in a Tax Day report that as of April 14, the average refund this filing period had topped $3,400, up 11 percent from last year.
According to The Hill, the Internal Revenue Service (IRS) has issued about 70 million tax refunds through April 4, compared with about 68 million for the same period last year and about 66.8 million in 2024.
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Here’s how Americans plan to spend their tax refunds:
According to a survey conducted by Experian last month, roughly one-third of 1,000 respondents planned to save their refunds, an increase of two percentage points compared to the same survey conducted last year.
One in five respondents, or roughly 20 percent, planned to use their refunds to pay down debt. Seventeen percent said they would use it to pay for necessities, and 10 percent said they would invest the refund. Only six percent said they planned to use the money back on “wasteful” spending, down three percentage points from last year.
Saving tax refunds is a “smart and responsible financial choice,” according to Amy Matsui, vice president for childcare and income at the left-leaning National Women’s Law Center, but the prevalence of the practice underscores that these slightly higher tax refunds are not delivering the economic stimulus the administration promised.
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If you’re still undecided about how to use your tax refund and what the best possible way would be, CNBC shared some suggestions on how to make your tax refund work.
1. Paying off credit card debt: According to the Federal Reserve Bank of New York, Americans held over $1.233 trillion in credit card debt in the third quarter of 2025, with the average balance exceeding $6,700. With credit card interest rates higher than almost any other form of debt, eliminating your balance is definitely one of the smartest moves you can make money-wise. According to a TaxSlayer survey, roughly 37 percent of Americans use their tax refunds to pay their credit card bills. While the average repayment is lower than the average credit card debt, most Americans will not be able to pay it off in full. However, they get the ball in play.
2. Strengthening the emergency fund: It is extremely important to have a financial cushion to deal with unforeseen events that can range from a broken appliance to a sudden job loss. Financial experts recommend putting three to six months of living expenses in an emergency fund. For example, if the average household’s monthly expenses are around $6,440, then an emergency fund would be somewhere between $20,000 and $40,000.
It’s worth noting that more than 40 percent of people have only $250 or less saved. So replenishing your emergency fund can be one of the most important steps. Remember that your emergency fund should still be easily accessible while earning interest.
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3. Paying off student loans: Although the student loan moratorium ended in October 2023, millions of borrowers have yet to resume regular payments. It can be tempting to think of student loan debt as less pressing than other financial obligations; after all, it’s not like your education can be taken away. However, credit providers report delinquent accounts to the credit bureaus, and missing payments can drop your credit score by up to 200 points. A tax refund on a higher-than-usual loan payment can help you catch up and get closer to debt-free. Be sure to check if your lender imposes any penalties for making higher payments.
4. Down payment on the house: The next best use of tax refund money can be putting down a down payment on a house.
5. Savings for children’s education: Citing data from 2025, the report says tuition at state public colleges averages around $11,011 per year, while tuition at private schools averages $43,505. So, using this money for children’s education can prove to be a real game changer as it can reduce some of your burden.
Key things
- About one-third of Americans plan to save their tax refunds, indicating a shift toward more responsible financial behavior.
- Paying off high-interest credit card debt is a common strategy, with many looking to use refunds to do so.
- Investing in children’s education and boosting emergency funds are also popular choices, emphasizing long-term financial stability.
