A new study has found a third of Americans plan out what to spend their tax refund on half a year in advance.
The new poll of 2,000 U.S. taxpayers found 79% believe they’ll get some sort of refund this year, and many of them have already planned out what to spend it on.
A majority (52%) said their tax refund is an important part of their budgeting plans, and 77% plan to spend their refund on necessities.
Chief among necessities were bills like rent (52%), groceries and essential items (44%), and credit card debt (37%).
Over half (56%) of those spending their refund money on credit card debt are specifically targeting their holiday season purchases.
Meanwhile, 8% are planning to spend their refund on luxuries. They’re spending their refund on new clothes (37%), entertainment (28%) and new phones (26%).
Commissioned by TaxSlayer and conducted by Talker Research, the study found the average person hopes to receive roughly $1,700 in tax refund money this year.
A fifth (22%) believe they’ll end up with more money this year than last, while 26% believe the opposite. Half (51%) expect to receive about the same amount.
Last year, 12% said they got a larger-than-expected tax refund, while 20% recalled getting less than what they expected.
Many respondents expecting to receive more this year said it was due to withholding more money on their W-2, making more money in the past year, and having a newborn.
Those expecting to receive less shared potential causes why: losing their job, owing back taxes, children aging into adulthood, and increased tax rates.
“Collectively, people are learning to strategize better where their refunds are going,” said Seth Babb, head of consumer product at TaxSlayer. “By planning ahead, people are reducing the stress associated with taxes and, in some cases, creating excitement.”
The study also found that, while 54% plan to file their taxes by the deadline, 43% are actually planning to file early.
Early filers said they’re motivated by receiving their refund earlier than others (55%), not needing to deal with the stress of doing it before April 15 (43%), and having filed early last year (24%).
As they prepare to file this year, 37% said they plan to use DIY tax software and 19% are opting to do it manually.
“Filing early is a big part of reducing the tax-related stress,” continued Babb. “The earlier people file, the earlier they can access their refunds and spend it as planned.”
What are the top necessities and luxuries people spend their tax refunds on?
Respondents were asked to choose all the necessities and luxuries they would spend their refunds on. Here’s what they said:
Necessities
Bills, like rent and utilities – 52%
Groceries and essential goods – 44%
Credit card debt – 37%
Savings accounts – 22%
Home repair/improvement – 20%
Luxuries
New clothes – 37%
Entertainment – 28%
A new phone – 26%
Buying gifts for people close to me – 24%
A night out on the town – 23%
Survey methodology:
Talker Research surveyed 2,000 taxpaying Americans; the survey was commissioned by TaxSlayer and administered and conducted online by Talker Research between Dec. 13 and Dec. 20, 2024.
