Suze Orman: 4 Ways To Make the Most of Your Tax Refund
Written by
Ashley Donohoe
Edited by
Zuri Anderson
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Because of the One, Big Beautiful Bill Act’s tax breaks, the Tax Foundation estimates that the average federal tax refund will be $3,800, a $748 boost from last tax season.
A larger tax refund is good news for your finances, especially if you need to catch up on bills or give yourself more breathing room. But you should be strategic about how you use your windfall and take advantage of opportunities to become more financially stable and grow wealth.
In a recent blog post, financial guru and bestselling author Suze Orman suggested four ways to make the most of your tax refund. See which might be the right moves for you.
1. Boost Your Emergency Savings
A 2025 Empower survey found that 32% of Americans didn’t have emergency savings, and among those who did, their median balance was just $500.
Lacking sufficient savings puts you at risk of having to make difficult choices or borrow money when the unexpected happens. And if you’re already financially strained and end up in debt due to an emergency, it will become even harder to get out again.
That’s why Orman suggested using your tax refund to boost your emergency fund if you don’t have enough saved to cover eight or more months of living expenses. She noted that increasing unemployment levels are another good reason to build up your financial cushion now.
2. Cover Insurance Premiums
Orman wrote, “I know for many of you, just about every form of protection is costing more: Car insurance, home insurance, and for those relying on the ACA marketplace for health insurance, premiums have risen as well.”
When your tax refund arrives, consider putting a portion in a sinking fund to help cover your various premiums as you go. If possible, also look into whether you can pay for certain policies, such as car and renters or homeowners insurance, in full and get a discount.
Plus, it may be a good time to compare quotes and review your policy features to see if you can find more affordable options.
3. Pay Down Credit Cards
According to a recent TaxSlayer survey, 37% of respondents planned to use their tax refunds to tackle credit card debt. Considering that the average credit card interest rate is around 21%, this smart move offers a high guaranteed return and can significantly reduce your financial stress.
For the largest savings, use your tax refund to pay off the highest-interest cards first, a method known as the debt avalanche. If your cards have similar rates, you might prefer tackling the smallest balance first and going up from there, known as the debt snowball method.
“Reducing or wiping out high-cost debt is a huge win,” Orman wrote. “But only if you can promise yourself that you will do everything possible to avoid running up new balances you can’t pay off in full.”
4. Make Roth IRA Contributions
Even if you contribute to your employer’s 401(k) account, putting some of your tax refund in a Roth IRA can be a smart move. These accounts come with multiple perks, including no required minimum distributions, tax-free withdrawals and tax-free growth, given you meet certain IRS rules.
For 2026, you can contribute up to $7,500 if you’re younger than 50 or $8,600 if you’re 50 or older. However, Orman noted that you must qualify based on your modified adjusted gross income (MAGI) and filing status; in some cases, you can only contribute a partial amount.
Per this IRS news release, you can contribute up to the maximum in 2026 if your MAGI is below $153,000 as a single filer/head of household or below $242,000 as a joint filer. You become ineligible once your MAGI exceeds $168,000 as a single filer/head of household or $252,000 as a joint filer.
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