Personal Finance

How are Americans spending their tax refunds this year?

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by Max Rego - 04/26/26 6:00 AM ET

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by Max Rego - 04/26/26 6:00 AM ET

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On average, Americans are receiving larger tax refunds this year. So, how will they spend them?

The Treasury Department said in a release on Tax Day that as of April 14, the average tax refund this filing season was more than $3,400, an increase of 11 percent from last year.

Filers can check the status of their refund using the “Where’s My Refund” tool on either IRS.gov or the IRS2Go app. They must provide their Social Security number or taxpayer identification number, their filing status and the exact amount of their refund.

Treasury also said that more than 53 million filers utilized at least one of the provisions offered under the One Big Beautiful Bill Act (OBBBA), which President Trump signed into law last July.

More than 25 million filers, for instance, deducted their overtime pay — averaging out to more than $3,100 per filer. Under the law, individuals can deduct up to $12,500 of the “half” portion of their “time-and-a-half” overtime pay.

The provision phases out for those with an income of more than $150,000, or $300,000 for joint filers.

Treasury Secretary Scott Bessent said that the law “provided meaningful relief to middle- and low-income taxpayers, increasing take-home pay and putting more money back into the pockets” of families, workers and small business owners.

Elaine Maag, a senior fellow at the left-leaning Urban Institute’s Tax Policy Center, told The Hill on Wednesday that since the OBBBA was “retroactive” and covered all of 2025, while filers’ withholdings did not change, refunds were larger.

The law also boosted the child tax credit from $2,000 to $2,200 per child. Maag said that the credit, combined with the earned income tax credit that the IRS set at $8,231 for taxpayers with three or more children, accounts for slightly more than 20 percent, on average, of the annual income of someone making below the federal poverty line — which is $33,000 for a family of four, according to the Department of Health and Human Services.

“This might be the most important financial transaction of the year,” Maag said of those two credits.

Yet while refunds are greater, so are prices. The inflation rate in March was 3.3 percent, a jump of 0.9 percentage points from February.

The price of food last month was also up 2.7 percent, while the cost of energy was up 12.5 percent — a full 12 percentage points higher than February — amid the war with Iran. The conflict, which began on Feb. 28, has resulted in the Iranian military restricting shipping in the Strait of Hormuz, through which roughly one-fifth of the world’s oil typically flows, leading to a subsequent increase in gas prices stateside.

Taken all together, that means that the bump in refunds is being “eaten up by higher everyday costs,” according to Amy Matsui, the vice president for child care and income at the left-leaning National Women’s Law Center.

Matsui told The Hill via email Thursday that as the economy “weakens,” Americans are less likely to spend their refunds “in ways that would boost consumer demands,” such as eating out or traveling.

A poll conducted by Experian last month found that one-third of 1,000 respondents planned on saving their refunds, an increase of 2 percentage points relative to the same survey it took last year. One in 5 respondents said they would use their refund to pay down debt, while 17 percent said they would use it to pay for necessities and 10 percent said they would invest it.

Just 6 percent, meanwhile, said they planned on using their refund for “splurge” spending, down 3 percentage points from last year.

Matsui wrote that while saving your tax refund is a “smart and responsible financial choice,” the prevalence of the practice “underscores that these slightly higher refunds are not delivering the economic stimulus the administration promised.”

Garrett Watson, director of policy analysis at the right-leaning Tax Foundation, told The Hill Thursday that the “key question” about higher refunds is whether Americans use them to “build up a savings buffer” amid the aforementioned higher costs.

“If they do, that would limit the amount of additional spending they were to engage in,” Watson said via email.

The OBBBA was not just about taxes, either. New work requirements tied to the Supplemental Nutrition Assistance Program (SNAP), for instance, will reduce participation by roughly 2.4 million people in an average month through 2034, according to the Congressional Budget Office (CBO).

Maag said that the cuts to SNAP and Medicaid under the law, along with the