\n<\/p>\n
Tax refund season can feel like a rare financial exhale. But for many Americans, that money isn\u2019t extra cash \u2014 it\u2019s a lifeline.<\/p>\n
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<\/a>. This year, the money is largely earmarked for financial necessities, not splurges.<\/p>\n Tax refunds are becoming a bigger part of how many households make the numbers work.<\/p>\n 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\u2019t afford.<\/p>\n \u201cThe last few years, we\u2019ve used it to cover moving expenses,\u201d Jackson said. \u201cIt was the only way I could pay first and last month\u2019s rent, the deposit, all the other costs that go along with moving.\u201d<\/p>\n This year, he\u2019s putting it toward a down payment on a car.\u00a0 \u201cBeing able to get the car is a big deal \u2014 surviving on one car isn’t practical anymore,\u201d he said. \u201cIt was necessary, but pretty much my entire refund went to that.\u201d<\/p>\n According to the LendingTree survey data, nearly half of filers (46%) say they\u2019re relying on getting a refund this year. That\u2019s up from 42% last year and 40% in 2024.<\/p>\n For many households, including Jackson\u2019s, tax refunds have shifted from a nice-to-have to something closer to a financial backstop.<\/p>\n \u201cI feel like I\u2019m paralyzed half the year, waiting on these taxes to come in,\u201d he said.<\/p>\n Two-thirds of filers say their refund is very or somewhat important to their financial situation, and more than half say they\u2019d need to spend it within a month of receiving it.<\/p>\n \u201cRefund time has always been a survival thing \u2014 I need food, I need to move, I need to pay the rent,\u201d Jackson said. \u201cMost people I know are in that same situation to some degree.\u201d<\/p>\n The groups most likely to say they\u2019re relying on a refund are also under the greatest financial pressure: younger adults, parents with children under 18, and lower-income households.<\/p>\n But the reliance isn\u2019t 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.<\/p>\n Read more: <\/em>Where\u2019s my refund? How to check your tax return status.<\/em><\/a><\/p>\n Many households say they\u2019re using their refunds to either solve an immediate financial problem or prevent the next one.<\/p>\n Among surveyed filers, 34% said they planned to use at least part of their refund for everyday expenses such as groceries<\/a>, rent, or bills. That was especially common among lower-income filers, millennials, and parents with young children.<\/p>\n 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.<\/p>\n At the same time, it underscores a harder truth: For many households, monthly income alone isn\u2019t leaving enough margin, says Patrick Yaghoobians, a certified financial planner and founder of Noor Financial Services.<\/p>\n \u201cMany people are facing increased financial pressure right now,\u201d he said.<\/p>\n However, Yaghoobians and other experts say that setting aside even a small percentage of your refund \u2014 say 5% \u2014 can add up and make a meaningful difference down the road.<\/p>\n \u201cIt can build momentum, making it easier to stay on track with the rest of your financial goals,\u201d he added.<\/p>\n Another 34% of survey respondents said they\u2019d use their refund to pay off debt.<\/p>\n That\u2019s one of the smartest places a refund can go, especially if the debt is on a high-interest credit card, said Yaghoobians.<\/p>\n 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.<\/p>\n Learn more: <\/em>4 ways to increase cash flow and pay off debt faster<\/em><\/a><\/p>\n Savings came in close behind the other top categories, with 32% of filers saying they\u2019d put at least part of their refund into savings or an emergency fund<\/a>.<\/p>\n 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.<\/p>\n \u201cAny time you\u2019re receiving a lump sum of money, such as a bonus, inheritance, or tax refund, I think it\u2019s important to make a plan for how you want to use those funds, and, importantly, how you should<\/em> use those funds,\u201d he said.<\/p>\n Without a plan, Oeth said it\u2019s easy for your refund windfall to slip away or be spent on impulse purchases.<\/p>\n Most experts recommend saving three to six months of living expenses, but even a modest emergency fund can make a real difference.<\/p>\n A split strategy can also work. If you\u2019re debating between paying down debt and saving, you don\u2019t necessarily have to choose one or the other. For many households, the best strategy is to allocate the refund across several financial goals.<\/p>\n Some taxpayers may see larger refunds this filing season.<\/p>\n 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.<\/p>\n 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<\/a>.<\/p>\n For the current filing season, the IRS highlighted several new or enhanced deductions tied to the legislation, including an added deduction for:<\/p>\n Eligible seniors<\/p>\n<\/li>\n Qualified tips<\/p>\n<\/li>\n Qualified overtime income<\/p>\n<\/li>\n Expanded state and local taxes (SALT)<\/p>\n<\/li>\n Some new car loan interest<\/p>\n<\/li>\n<\/ul>\n In general, deductions lower taxable income, which can reduce a filer\u2019s tax bill and, in some cases, increase the size of a refund.<\/p>\n Still, a higher average refund doesn\u2019t 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\u2019t.<\/p>\n Read more: <\/em>Tax refunds up nearly 11%, with over 37 million Americans cashing in on new tax breaks<\/em><\/a><\/p>\n A bigger refund<\/a> can feel like a win. But it might not actually be the best move for your finances.<\/p>\n 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.<\/p>\n That can lead to missed opportunities throughout the year, said Oeth. \u201cThose dollars could have been accruing interest for you in a high-yield savings account,\u201d he explained.<\/p>\n Still, getting a sizable refund isn\u2019t 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.<\/p>\n But from a money-management standpoint, an oversized refund can mean you had less take-home pay \u2014 that\u2019s money you could have used to pay for essentials or tackle debt all year, not just at tax time.<\/p>\n The IRS encourages taxpayers to review their withholding by using the agency\u2019s Tax Withholding Estimator<\/a>.<\/p>\n Read more: <\/em>Withholding tax: What is it, and how can I check or change it?<\/em><\/a><\/p>\n The best way to use your refund depends on what\u2019s hurting your finances most right now.<\/p>\n If you\u2019re carrying high-interest credit card debt, your refund can be a powerful tool for cutting future interest costs and improving monthly cash flow.<\/p>\n \u201cFinding a good budgeting tool that you\u2019ll use consistently to help manage bills and evaluate spending can make a huge difference,\u201d suggested Oeth.<\/p>\n If your bills are under control but you don\u2019t have an emergency fund, building one up with that extra cash is a smart move.<\/p>\n \u201cSmall steps can help build momentum and create better financial habits over the long run,\u201d Yaghoobians said.<\/p>\n 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\u2019ve been putting off.<\/p>\n Read more: <\/em>Tax refunds are bigger this year. Here are 5 smart ways to use yours.<\/em><\/a><\/p>\n 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.<\/p>\n\n