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Majority Of Americans Will Spend Tax Refund On Debt

It’s officially tax season; Tax Day arrives on April 15. The sooner you file your 2023 taxes, the quicker you’ll receive your tax refund.

Of course, tax refunds mean some added spending money for many Americans. Endless possibilities exist, and we’ve compiled a data-backed list showing the most popular things Americans do with their tax refunds once reunited with their hard-earned money.

What are people spending that tax refund on? We surveyed 600 Americans from across the country and 66% of respondents told us they plan to spend some or all of their refund on bills and debt. That isn’t unusual, though, with 41% saying their refund spending habits are about the same.

The number one way people spend their tax refunds

If you are already thinking that — especially within the last few years — you need to use your 2023 tax return to pay bills or pay down a loan, you’re in the majority.

The survey allowed participants to select multiple categories. At least 20% of participants said they planned to spend some of their tax return on the following:

  • Bills/Debt: 397 (66.17% of respondents)
  • Savings/Investments: 212 (35.33%)
  • Shopping/Consumer Goods: 188 (31.33%)
  • Home/Rent: 185 (30.83%)
  • Vacation/Travel: 142 (23.67%)
  • Entertainment/Leisure: 130 (21.67%)
  • Emergencies/Unexpected Expenses: 121 (20.17%)

While savings and investments are second, barely one-third of participants can afford to put some of their refund into that bucket.

Catching up on life, unexpected expenses, and debt

According to GoBankingRates, 48% of Americans depend on credit cards daily, and 61% have credit card debt.

When challenging financial circumstances arise, most people use money for necessities over luxuries. A tax refund provides a tremendous opportunity for those in debt to reduce their debts.

Considering this, you shouldn’t be surprised that several other survey questions revealed more about participants using their tax returns to cover life expenses, bills, and debts.

42% spend their entire tax refund

Approximately 42% of respondents said they annually spent their entire tax refund. Another 26% said they spend half, meaning more than two-thirds of people spend at least half of their tax return.

The remaining 32% broke down as follows: 13% said they spend less than half, while 19% said they don’t usually spend their tax refund.

31% plan to spend their tax refund immediately

Roughly five in six survey participants spend their tax return within the first three months of receiving it. Can you guess the breakdown?

  • 31% spend it immediately
  • 31% spend it within a month
  • 21% spend it within 1-3 months

Presumably, most people spend that money quickly out of necessity, not luxury. Based on the previous answers, they spend it to catch up on life.

Tax refund seen by most as an emergency fund

Nearly 38% of respondents said they use their tax refund to pay off debts.

  • 22% use all of their refund to pay off debts
  • 11% to catch up on overdue bills
  • 4% prioritize paying off credit card debt
  • 1% use it to pay down student loans

On top of that, 4% said they put it toward paying their mortgage or rent.

Ready to see the numbers skyrocket? Another 31% allocate a portion of it to paying off debts while using the rest on a splurge purchase.

Nearly 75% of respondents use their tax returns for some form of debt, bills, or life expenses.

Other tax refund uses

Outside of the doom and gloom, many Americans allocated their 2023 tax refund to responsible purchases.

But let’s take a step back for a second. In a perfect world, you wouldn’t get a tax refund.


A tax refund mean that you overpaid your taxes all year. You effectively gave the government an interest-free loan on the money you could have put to productive use.

Of course, that’s not the world many of us live in. But it’s still no surprise that people put that money to good use once reunited with it.

A few statistics:

  • 30% of respondents have already filed their taxes and received a refund.
  • 34% use some of their tax refund towards meeting their yearly financial goals.
  • 16% rely solely on their tax refund to meet their yearly financial goals
  • 39% save a portion of their tax refund for emergency savings.

More specifics:

  • 7% put their tax refund into retirement savings.
  • 5% save it for future large purchases.
  • 3% put it toward a new vehicle fund.
  • 2% save it for a down payment on a house.
  • 2% donate it to charity.
  • 1% save their tax refund for starting a business.
  • 1% save it for creating a college fund.

Most receive a tax refund of less than $2,000

Bills and debt don’t go away during tax season, but neither does your list of other physical needs and material wants. Thanks to tax refund deals, Tax Day presents one of the best retail opportunities of the year for making purchases.

Even if you’re in debt, a tax refund allows you to make a few purchases without compounding that debt.

Most respondents said they receive less than a $2,000 tax refund each year.

  • 16% receive less than $500
  • 20% receive between $500 and $1,000
  • 20% receive between $1,000 and $2,000
  • 9% do not receive a refund
  • 5% prefer not to disclose

You might consider a small refund from your 2023 taxes insignificant in the bigger picture. Even $2,000 will not drastically change most Americans’ life circumstances.

So, maybe this is the time to enjoy even a small splurge purchase or create a new experience for yourself. Only you can decide, though.

See if you can find any tax refund deals, fun happy hours, restaurant promotions, or discounts at a local store. Go get a massage or buy those shoes. Take yourself to a sporting event or try skydiving.

A little “newfound” cash can go a long way; the possibilities are endless.


In February 2024, PlayUSA partnered with Pollfish and surveyed 600 American wage earners about their tax refund spending habits. Of those surveyed, 43% were men, 57% were women. The age breakdown is as follows:

  • 25 – 34 (27%)
  • 35 – 44 (29.67%)
  • 45 – 54 (22.5%)
  • >54 (20.83%)

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