Americans Are Spending Unexpectedly Large Tax Refunds On Essentials Rather Than Splurging

A new survey suggests U.S. taxpayers are taking a more practical approach with their unexpectedly large tax refunds this year, using the extra cash to cover everyday expenses rather than luxury items or splurges.

The survey, conducted by Talker Research on behalf of TaxSlayer, polled 2,000 taxpayers before and after filing season and revealed that nearly two-thirds (64%) have already spent or plan to spend their refund checks, and the overwhelming majority are prioritizing essentials. Topping the list are bills like rent and utilities (58%), groceries and basic goods (48%), and paying down credit card debt (29%).

This years average refund also exceeded expectations. While respondents last December predicted they would receive about $1,700, the actual amount averaged over $2,300 — a welcome surprise during uncertain economic times. Notably, 62% reported feeling happy and surprised by the size of their refunds, up significantly from the previous years 40%.

The trend toward financial prudence is clear. Of those who have yet to spend their refunds, 72% plan to focus on necessary purchases, while only a small percentage cited non-essential expenses like entertainment or discretionary purchases.

Seth Babb, Head of Consumer Product at TaxSlayer, believes the findings reflect a strategic mindset.

“This study confirms that people are strategic about how they use their tax refunds in general,” Babb said. “By planning ahead, you can focus on whats essential and be intentional about your spending decisions.”

The research also revealed changes in taxpayer behavior regarding filing. This year, 41% of respondents filed early, while 57% filed on time — aligning closely with what they had projected in the December portion of the study. Many cited stress avoidance and quicker access to refunds as key reasons for filing sooner.

Looking ahead, early filing is expected to remain popular. Nearly half (47%) of respondents said they would file early again in 2026 to receive refunds sooner and avoid tax season stress.

“It’s always a good idea to file early,” Babb said. “Getting your taxes done early means you have more time to plan, more options, and a clearer financial picture for the year ahead.”

As Americans continue to adjust their financial strategies, tax refunds are playing an increasingly important role in household budgets. According to the study, 61% said their refunds are a key part of their financial planning for 2025, up from 52% last year.

For many, this year’s refunds have already made a difference. One respondent summed up the sentiment simply: “Knowing the rent is paid and groceries are stocked gives me peace of mind — and thats priceless.”