5 smart ways to spend your tax refund
If you’ve been anxiously checking your mailbox or your bank balance in anticipation of a big refund check from the Internal Revenue Service (IRS), you’re in good company. In 2026, some 46% of Americans say they’re relying on getting a refund.1 And undoubtedly, many already have big plans for what to do with the money — plans that involve travel, shopping sprees, or home improvement projects.
In 2025, the IRS processed 165 million individual tax returns. Of those who filed taxes, 63% received a refund, and refunds averaged $3,167.2 Though it’s understandable to want to treat yourself, what if this year you think beyond the immediate thrill and put your refund to work in ways that pay off long term? Sure, paying down debt or adding to your savings may not seem as exciting as booking a trip right now, but think of these savvy money moves as a treat your future self will enjoy.
If you’re one of the lucky ones getting a refund this year, consider these five strategies to put your tax refund to work.
1. Save for retirement
If you’re enrolled in a retirement account through your employer, consider increasing your contributions or looking into an IRA through a bank or financial company. Most retirement experts recommend contributing 10% to 15% of your income toward your 401(k).3 The highest amount you can contribute in 2026 is $24,500 with a catch-up contribution of $8,000.4 Using your return to reach these levels can pay off in the long term. I can help guide you through the process. Time has a powerful multiplier effect when it comes to retirement savings, so starting early and adding gradual increments over time may make a big difference in the years to come.
2. Fill up your emergency fund
An emergency fund can be helpful for covering unexpected expenses without going into debt, but just 47% of Americans have enough cash on hand to cover an unforeseen expense of $1,000, and 29% say they owe more on their credit cards than they have in an emergency fund.5 Creating a buffer using your tax refund can help pay for a surprise car repair or medical bill without veering off your financial course.
3. Pay down your debt
Speaking of credit card debt — the average credit card balance in the US is $6,523.6 Carrying a big balance means you’re losing money to pay interest every month. Use your refund to make progress paying off your credit card or student loan so you can get closer to being debt-free.
4. Save for college
If you’re a parent, consider putting the money into a 529 fund to start saving for your child’s education. If you save enough now, you may be able to avoid going into debt to pay for college later.
5. Book a consultation with me
I can help you understand your options among a range of financial products, so you can spend your refund wisely, knowing how it will impact your financial future.
Getting a refund on your taxes isn’t the same as finding money — it’s money you overpaid, essentially giving an interest-free loan to the government. Consider asking your payroll department at work to reduce the tax withholding on your paycheck so you can keep more of that money in your wallet. If you’re self-employed, see if you can reduce your quarterly tax payments. And plan to spend this year’s refund on your future financial confidence, instead of something you don’t need.
Disclaimer:
1 Daniel de Visé, Where's my tax refund? More Americans are counting on them in 2026, USA Today, March 2026
https://www.usatoday.com/story/money/2026/03/22/where-when-irs-tax-refunds-2026/89244462007/
2 National Taxpayer Advocate delivers Annual Report to Congress; finds taxpayer service was strong in 2025 but foresees challenges for taxpayers who encounter problems in 2026, IRS, January 2026
https://www.irs.gov/newsroom/national-taxpayer-advocate-delivers-annual-report-to-congress-finds-taxpayer-service-was-strong-in-2025-but-foresees-challenges-for-taxpayers-who-encounter-problems-in-2026
3 Derek Silva, How Much Should You Contribute to Your 401(k)?, SmartAsset, December 2025
https://smartasset.com/retirement/how-much-should-you-contribute-to-your-401k
4 ibid.
5 Karen Bennett, Bankrate’s 2026 Annual Emergency Savings Report, Bankrate, February 2026
https://www.bankrate.com/banking/savings/emergency-savings-report/
6 Ali Hussain, How Does Your Credit Card Bill Stack Up Against the US Average Today?, Investopedia, March 2026[JP1]
https://www.investopedia.com/how-does-your-credit-card-bill-stack-up-against-the-us-average-today-11930013
Material discussed is meant for general informational purposes only and is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon only when coordinated with individual professional advice.
“Financial advisor” / “advisor” is used generally to describe insurance/annuity and investment sales and advisory professionals who may hold varied licensing as insurance agents, registered representatives of broker-dealers, and investment advisory representatives (IAR) of registered investment advisors, respectively. Only those representatives who use advisor in their title or otherwise disclose their status and meet the necessary licensing or registration requirements provide investment advisory services.
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