The sobering way most Americans plan to use their tax refunds this year

Andrew Keshner

Tax refunds are projected to be larger on average - and Americans are thinking hard about how to spend them

It's a closely watched tax-refund season. How are people going to use the money they get back this year?

Even if Americans receive bigger income-tax refunds in the coming months than they have in past years, don't expect a widespread spending spree.

Savings, debt reduction and everyday costs are the top ways people are planning to use their tax refunds this year - and other uses don't even come close. That's according to new data out Thursday from the National Retail Federation, which has been polling consumers for nearly 20 years about how they use their tax refunds.

Fifty-two percent of people say they plan to put their refund into savings this year. Of those who received a refund last year, 42% said they put it toward savings, according to the data.

The trade association's polling goes back to 2007, and over that period, 52% is the second-largest share of people who said they plan to save their refund money. In 2021, 54% planned to put refund money toward savings.

The NRF survey polled nearly 8,000 people from Jan. 30 to Feb. 5.

A tax refund is often the largest single payment many Americans receive all year. This year, it comes as consumers keep watching the costs rise for necessities including housing, healthcare and utility bills.

On Friday, new Commerce Department data showed Americans' personal savings rate slipping to 3.6% in December, down from 3.7% in November. The savings rate, as a share for disposable income was also down from 4.3% at the same point one year earlier.

There are other ways strain and uncertainty felt by consumers may show up in the survey about tax refunds.

This year, 30% of people say they are planning to use their refund money for everyday expenses, up from 28% a year ago. Meanwhile, 32% say they are planning to use the money to pay down debts. That's off slightly from 33% one year earlier.

At the same time, 12% of people said they would use the money on a big purchase like a car, television or furniture. That's up from 10% a year ago.

It's the first tax-filing season under President Donald Trump's major new tax law. Due to a range of new and expanded tax breaks, estimates point to refunds being higher this year.

So far, refunds for tax year 2025 are averaging $2,290, according to the IRS. That's up almost 11% from a year ago, according to the tax agency's first round of filing-season data. The numbers will shift as millions more returns pile in by April 15.

Even with the extra focus on refunds this year, tax experts say a larger refund isn't necessarily a good thing. It's actually a return of overpaid taxes, which is effectively an interest-free loan to the federal government.

Refunds commonly go toward savings, debts and everyday costs, a trend that held true last year.

The polling aligns with other surveys showing that many people see their refund this year as an anchor to keep them grounded rather than a catalyst to turbocharge their spending.

For example, more people planned to put upcoming refunds into savings and investments compared with a year ago, according to a consumer survey from Pymnts Intelligence. A larger share also planned to put the upcoming refund toward everyday costs.

And according to a November survey from tax-preparation software provider TaxSlayer, almost six in 10 people said they planned to put this year's refund money toward necessities like groceries, rent and utilities.

JOIN THE DON'T SHORT YOURSELF LIVE Q&ATax season stressing you out? We've got you. Join Don't Short Yourself Live to ask MarketWatch's Andrew Keshner and Beth Pinsker your tax questions on Wednesday, Feb. 25, 2026, at 1:30 p.m. Eastern time.

-Andrew Keshner

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02-21-26 1852ET