Getting an Inflation Refund Check? 5 Best Ways To Invest It
Written by
Martin Dasko
Edited by
Zuri Anderson
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According to the New York Department of Taxation and Finance, the 2025-2026 state budget introduced the first-ever inflation refund checks, with over 8 million New Yorkers set to receive up to $400.
The official website announced that the checks would be mailed out over a period of multiple weeks starting at the end of September. Since the eligibility is based on the income you reported on your New York State Income Tax Return for 2023, you’ll want to ensure that you’ve completed your paperwork.
The good news is that New York residents can receive financial assistance to help manage their finances.
If you’re getting an inflation refund check, then these are the best ways that you can invest it to stretch your funds and maximize your return from this financial windfall.
Leave It In a High-Interest Savings Account
“Most people tend to quickly spend or invest 100% of these funds, however, I recommend placing 50% in a high-yield savings account earning about 4% interest annually,” remarked J.R. Faris, a tax accountant and the president of Accountalent. “This, alone, can earn about $40 a year for every $1,000 saved.”
Your first step is to ensure that you have a high-yield savings account that allows you to earn a decent return on your money so that your funds aren’t sitting in a checking account that doesn’t earn anything. You may want to consider leaving your funds in this account while you decide on your next steps because you may not want to rush into any kind of decision at this moment.
Establish an Emergency Fund
“If and when you receive one, you should use your inflation refund check as an opportunity to enhance your financial future; don’t treat it as a temporary boost to your spending power,” said Sherman Standberry, a certified public accountant (CPA) and managing partner at My CPA Coach, who recommends that you use the money to build or improve your emergency fund.
“An ideal defense against unexpected expenses is to have an easily accessible emergency fund that’s equivalent to [three to six] months of your essential expenses,” he added.
While it may be tempting to splurge once you get your hands on extra cash, using the money wisely by putting it aside for emergencies can provide long-term security. If you’ve been struggling with money management due to inflation and rising costs, consider investing in your emergency fund to give yourself some breathing room and liquidity.
Pay Off High-Interest Debt
Faris noted that paying down high-interest debt is always a wise move, especially if you’re going through unpredictable periods. The general consensus is that with credit card interest rates being higher these days, the money that you save on interest payments will be a guaranteed return on your money. Once you pay off your debt, you can also get more aggressive about your investments.
Invest in Index Funds
“Having some money set aside for when things go wrong is one thing, but being able to invest funds for future growth is another,” shared Standberry. “One option is to invest in a low-cost S&P 500 index fund to take advantage of the market’s potential growth.”
The inflation check can help you catch up with your investment contributions, ensuring you don’t miss out on potential opportunities in 2025. Faris also recommends allocating the remainder of your inflation check to growth, once you’ve ensured you have money set aside for a rainy day.
The best part about investing in an index fund is that you can be a passive investor because you don’t have to worry about tracking the performance of one company. The index fund will handle the allocations for you while allowing you to diversify your investments.
Put It Towards Your Retirement Account
Standberry advises contributing to your tax-advantaged retirement accounts, such as a Roth IRA, where the money can grow tax-deferred. Faris suggested combining the idea of investing in an index fund with an IRA.
“An index fund that averages 8% annual growth can double in under ten years with proper contributions made, and a Roth IRA allows this earnings growth to remain tax-free,” he added. “These little automatic investments are better and more productive than chasing trends.”
The experts agreed that even experienced investors can benefit from setting aside as little as $100 per month, as small, steady efforts can compound faster than most expect. This inflation check can be the perfect opportunity to start investing in your future, especially if you’ve fallen behind with keeping up with your financial goals.
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