There is about a week left until the close of this year’s tax season, and returns are due April 15.
So far, the average tax refund amount is 11.1% higher than a year ago, totaling $3,521, according to Internal Revenue Service data for the week of March 27. That left taxpayers with an average increase of $351 compared to a year ago amid new and expanded deductions through the One Big Beautiful Bill Act. Consumers are also facing higher gas prices and using their refunds for necessities such as rent and food, which could reduce profits.
Meanwhile, the government has received fewer returns than a year ago. As of March 27, the IRS has processed 87.5 million returns, compared to 88.5 million the same week last year. But the total number of refunds increased by 2.2%, reaching almost 63 million.
Read more: Four Ways the One Big Beautiful Bill Could Reduce Your Taxes
Many households say they are using their refunds to resolve an immediate financial problem or prevent the next, according to Lending Tree survey data.
Among taxpayers surveyed, 34% said they planned to use at least part of their refund for everyday expenses such as groceries, rent or bills. This was especially common among low-income taxpayers, millennials, and parents with young children.
If a refund helps cover necessities without forcing you to rack up a credit card balance, fall behind on rent, or juggle bills, that money is doing exactly what it’s supposed to do.
At the same time, it underscores a harder truth: For many households, monthly income alone doesn’t leave enough room, said Patrick Yaghoobians, certified financial planner and founder of Noor Financial Services.
“Many people are facing increased financial pressure right now,” he said.
However, Yaghoobians and other experts say that setting aside even a small percentage of your refund (for example, 5%) can add up and make a significant difference in the future.
“It can build momentum, making it easier to stay on track with the rest of your financial goals,” he added.
Another 34% of respondents said they would use their refund to pay off debt.
That’s one of the smartest places a refund can go, especially if the debt is on a high-interest credit card, Yaghoobians said.
Paying off expensive revolving debt can reduce the amount you owe in future interest payments, free up space in your monthly budget, and reduce the risk that an emergency expense turns into a longer financial spiral.
More information: 4 Ways to Increase Cash Flow and Pay Off Debt Faster
Savings ranked closely behind the other top categories, with 32% of taxpayers saying they would put at least part of their refund into savings or an emergency fund.
That measure may not offer the instant relief that paying a bill does, but creating a cash cushion is vital, especially for working families with children, said Scott Oeth, CFP and principal at Cahill Financial Advisors in Minneapolis.
“Any time you receive a lump sum of money, like a bonus, inheritance, or tax refund, I think it’s important to make a plan for how you want to use those funds and, more importantly, how ought use those funds,” he said.
Without a plan, Oeth said it’s easy for unexpected refund money to slip away or be spent on impulse purchases.
Most experts recommend saving three to six months of living expenses, but even a modest emergency fund can make a real difference.
A split strategy can also work. If you’re debating between paying off debt and saving, you don’t necessarily have to choose one or the other. For many households, the best strategy is to allocate the repayment to several financial goals.