I’m a Banking Expert: Smart Ways To Use a Bigger Tax Refund in 2026
Written by
Gabrielle Olya
Edited by
Molly Sullivan
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Many Americans may have received larger tax refunds this year. New Bank of America Institute research found that refunds could be 25% higher than last year, creating an opportunity to reset or strengthen your finances.
GOBankingRates spoke with Mary Hines Droesch, consumer spending expert at Bank of America, to get her top tips for making the most of bigger tax refunds in 2026 — here’s what she recommended.
Plan To Direct Your Refund Into Savings
Don’t wait until the check arrives to decide its fate. Instead, consider taking a proactive approach by planning to deposit your refund check directly into your savings account.
With 52% of Americans prioritizing increasing their savings in 2026, your refund is an excellent way to proactively stay on track with your financial goals.
Strengthen Your Emergency Fund for Financial Security
While general savings are important, a dedicated emergency fund is your immediate financial safety net. For the 32% of Americans who find building their emergency funds challenging, a larger refund presents an opportunity to build up their financial safety net.
Aim to save anywhere from three months up to a year’s worth of living expenses and build toward your goal consistently through small and manageable contributions. Even a portion of your refund can provide peace of mind.
Allocate a Portion for Enjoyment or Giving
You’ve worked hard for your money, so there’s nothing wrong with allocating a responsible portion of your refund to something that brings you joy. This could be a small indulgence, a memorable experience or a donation to a cause you care deeply about.
After covering your essential financial needs, consider a small splurge or contribution to a cause that you’re passionate about. This mindful approach allows for fulfillment without derailing your financial progress.
Pay Down High-Interest Debt
This year, Americans are ready for a financial reset. Bank of America research shows that nearly 9 in 10 Americans set financial resolutions for 2026, with 36% focused on paying off credit cards as a top priority.
Your tax refund offers an excellent opportunity to make a dent in paying off high-interest debt. Focus on paying down the amounts with the highest interest rates first. This will strengthen your financial foundation as you continue to save toward your financial goals.
Put Part of Your Refund Toward Long-Term Growth
Once your immediate needs are covered, think about how your refund can support your long-term goals. Consider putting some of it into an investment account. You don’t need a lump sum of money to begin your investing journey — a few hundred dollars is plenty to get you started.
Platforms like Bank of America’s Merrill Edge Self-Directed make it easy to begin with only a few hundred dollars. A little planning now can turn your refund into long-term financial security.
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