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What should I do with my tax refund?

Updated: Nov 28, 2023

The psychology of saving tax refunds

What are people doing with their tax refunds?

According to the CNBC Your Money Financial Confidence Survey, over one-third of Americans are saving their tax refunds this season. Another 44% of respondents have earmarked the funds to pay off debt or bills. That means that around 1 in 4 will spend their tax refund.

When can I expect my tax refund?

Use the IRS tool Where's My Refund? The IRS updates the information once a day, overnight.

What You Need

  • Your Social Security or taxpayer ID number

  • Your filing status

  • The exact refund amount on your return

What is the psychology behind spending or saving tax refunds?

The psychology behind saving your tax refund can make it challenging. Many of us wrestle with the feeling of "present bias," which is the tendency to prioritize immediate gratification over long-term goals. Since a tax refund represents a lump sum of money, spending it on immediate wants and desires can be tempting rather than saving it for future needs.

This tendency can be exacerbated by the fact that many people view their tax refund as a windfall or bonus rather than money they have earned through their hard work.

Some of us tend to mentally compartmentalize money and assign different values or purposes to different funds, called mental accounting. For example, a person may view their tax refund as "fun money" separate from their regular income and savings, which can make it more difficult to resist the temptation to spend the refund on discretionary purchases rather than saving it for more practical or long-term goals, such as building an emergency fund or paying off debt.

How should I spend my tax refund?

Spending your tax refund can be tempting, and it is not uncommon for folks to use their tax refunds to treat themselves to a vacation or other experiences. Assuming this is a financial goal you were saving for that you can now afford, this could make you happier.

As we have shared, experiences often make us happier than purchasing possessions. Despite this, some people use tax refunds to indulge in a luxury they might not otherwise be able to afford.

How can I work with my spouse to save?

You can avoid turning windfall dollars into wasted dollars by first speaking with your spouse and start with what goals do you have in place where the money can be applied. Set up systems to save that make spending inconvenient and saving automatic and easier.

  • Schedule autosaves or auto transfers to savings for windfalls such as extra paychecks or tax refunds.

  • Make good habits apparent and easy.

  • Sign up for "round up" services with your financial institution if free. If not offered, consider these services from third parties.

  • Set up a direct deposit to save a portion of your paycheck automatically.

Read our previous post, 5 Tips for How to Save Money: For Couples for more ideas.


Open a secure account with the highest savings interest rates in the nation.


How does marriage affects our taxes?

Where can we save our tax refunds?

Set up at least one savings account at a different financial institution than where you primarily bank. Compare (and avoid) fees and find the highest APY at a financial institution that works best for you and your spouse.

Choose the right savings product. If you do not need easy and fast access to your savings, consider certificates of deposits or iBonds.

How many people receive tax refunds?

According to CNBC, as of March 31, the IRS issued nearly 63 million refunds, with an average payment of $2,910. According to the IRS, the average refund in 2022 was $3,039.

How many people file electronically?

The IRS issued more than 237.8 million refunds to individuals in FY 2022. In that same year, close to 81.2 percent of all filings.

Where can we learn more about saving?

Enroll free into Money Marriage U Save by subscribing to our bimonthly newsletter.

Where do we turn if I still have questions about taxes?

Answers to 13 common tax season questions


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Dore, Kate. Most Americans Are Using Tax Refunds to Boost Savings or Pay off Debt, CNBC Survey Finds, CNBC, 11 Apr. 2023,

"Returns Filed Taxes Collected and Refunds Issued: Internal Revenue Service." Returns Filed Taxes Collected and Refunds Issued | Internal Revenue Service, Internal Revenue Service,

Jones, Damon, and Aprajit Mahajan. "Time-Inconsistency and Saving: Experimental Evidence from Low ... - NBER." Time Inconsistency and Saving: Experimental Evidence from Low Income Tax Filers, National Bureau of Economic Research (NBER), June 2015,

Lowery, G. (2010, March 31). Cornell Chronicle. Glee from Buying Objects Wanes, While Joy of Buying Experiences Keeps Growing. Retrieved February 17, 2022, from


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