Here’s How Americans Are Planning To Use Their Tax Refunds in 2022

Partial view of a USA Treasury Internal Revenue Service tax refund check showing the Treasury seal and image of the Statue of Liberty.
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In the first pandemic year without stimulus, tax refunds will bring sorely needed relief to many household budgets. If ever there were ever a year to plan for the annual IRS windfall, 2022 would be it.

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GOBankingRates surveyed 1,000 American adults and found plenty to be optimistic about. People are planning to do their taxes early this year, which is good news. The survey also showed that many people are expecting big refunds, and they’re confident that they’re getting all the deductions and credits they’re entitled to. The study also revealed how people are planning to spend their refunds this year — and there were plenty of surprises.

To add context to the numbers, GOBankingRates asked the experts to sort out what it all means. And although 12.5% of the study’s participants don’t expect to receive any refund at all, here’s how the rest plan to spend theirs.

Most Will Put Their Refund in Savings or Use It To Pay Down Debt

The biggest news to come out of the study was that 4 out of 5 people planned to save their tax refunds or use them to pay down debt — about 45% and 37%, respectively. Younger people were more likely than older people to do both and men were much more likely to save their refunds than to use them to pay their debts. Women were about evenly split.

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“It is a good sign that people are using their tax refunds to get ahead in their financial goals, whether paying down debt, saving, or otherwise,” said financial wellness facilitator Tiffany Grant of Money Talk With Tiff.

It wasn’t always that way, according to Grant. She believes that the COVID-19 crisis shook the country out of a complacent state of mind that viewed tax returns as free money gifted once a year for the purposes of celebration.

“I feel like the pandemic has made a lot of people more aware of their finances,” Grant said. “So, unlike in other years, they are starting to take precautions if something drastic like that were to happen again.”

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A Much Smaller Percentage Will Invest It

A smaller group, about 15% of respondents, will use the money to try to build wealth for the future. Younger people are more likely than older people to invest their refunds by a margin of 2 to 1 or more — likewise, with gender. About one-quarter of men will invest their refunds compared to fewer than 10% of women.

“Using tax refunds to diversify and add more security to your investment portfolio is an intelligent finance move,” said personal finance expert and business analyst Tim Hill, co-founder and CEO of Social Status. “Modern-day employees know the value of investments but fail to futureproof them because of unwise spending. Instead of smart investing, many people spend their tax refunds on online shopping — to buy new gadgets, clothes, shoes, etc. — and gambling, like online casinos and sports betting, potentially leading to long-term debt.”

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It’s Healthy To Treat Yourself, Travel and Donate Responsibly

More than 10% of the people surveyed plan on using their refunds to travel. Nearly double that percentage, more than 19%, will spend it on themselves — and if they can cover it, that’s just fine.

“It’s also important to enjoy your life,” said Kari Brummond, a tax preparer with TaxCure. “As long as you know that you can afford living expenses and short-term emergencies during the year, don’t be afraid to splurge with those extra funds. If you’re on a tight budget, tax refund time can be the most exciting time of the year for you. You just want to ensure that you don’t short-change yourself for the rest of the year.”

A much smaller segment — 2.6% of respondents — planned to donate their tax refunds, which can be just as fulfilling as travel and splurging.

“Help other people in your community,” said Burak Ozdemir, founder of Alarm Journal. “Indeed, last year was a tough year for everyone. Instead of just treating yourself, why not include the less fortunate ones in your community? Helping other people, regardless of how big or small it is, is incredibly rewarding, and nothing can ever replace it.”

Many Will Use Their Refunds To Keep the Wolves at Bay

Unfortunately, many Americans won’t emerge from tax season with a souped-up emergency fund or a vacation to remember. But they will get to enjoy the good feeling of finally having the cash to confront those stacks of overdue notices. Nearly 2 out of 5 respondents — 38.2% — will use their tax refunds to pay outstanding household bills.

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None of This Is Unusual

Despite the pandemic and all the changes it brought to consumer spending and saving, the results of the study are surprisingly consistent with tax seasons from pre-virus times.

“This has been the trend the last couple of years,” Brummond said. “Most people plan to save their refunds or use them to pay down debt. This isn’t COVID-related. According to a National Retail Federation survey from 2019, taxpayers had the same intentions with their 2018 refunds — about half planned to save, a third planned to pay down debt, and only 20% planned to splurge or go on vacation.”

The Best Way To Spend Your Refund Is Deliberately

What you do with the money is less important than your plan for spending it — and for not spending it. Don’t let what could be a game-changing amount of cash disappear by letting it get mixed in with your regular household money and devoured by everyday outlays.

“Unfortunately, during a lot of years, people plan to save their refunds, but they end up using them to cover bills or catch up on expenses,” Brummond said.

The trick is to have a plan for every dollar before those dollars arrive.

“Consistently budget your refund before you even get it,” Grant said. “That way, you know exactly where to apply the funds once they come in. Be sure that a portion goes to your financial goals and another part goes to something that will bring you joy. What those portions look like depends on what you are trying to accomplish with your money. Everyone’s goals look different.”

More From GOBankingRates

Methodology: GOBankingRates surveyed 1,000 Americans aged 18 and older from across the country between Jan. 31 and Feb. 1, 2022, asking six questions: (1) How do you plan on filing your taxes for this year?; (2) When do you expect to file your taxes this year?; (3) How much do you expect to receive in a tax refund?; (4) What do you plan to do with your refund? (Select all that apply); (5) Do you feel confident you are receiving all the deductions you feel qualified for?; and (6) If you received the Child Tax Credit this past year (2021) how do you feel it will affect your taxes? All respondents had to pass a screener question of: Do you plan to file taxes in 2022?, with an answer of “Yes.” GOBankingRates used PureSpectrum’s survey platform to conduct the poll.

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About the Author

Andrew Lisa has been writing professionally since 2001. An award-winning writer, Andrew was formerly one of the youngest nationally distributed columnists for the largest newspaper syndicate in the country, the Gannett News Service. He worked as the business section editor for amNewYork, the most widely distributed newspaper in Manhattan, and worked as a copy editor for, a financial publication in the heart of Wall Street's investment community in New York City.
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