Some people splurge on tax refunds, while others find theirs eaten up by rising gas costs.
Credit: Frederick J. Brown/AFP via Getty Images
Having a son at H&R Block can be a real advantage, like having him manage your tax filings. This year, 23-year-old Carl Matthew Morrall helped his parents receive around $3,700 back.
Jimmy Morrall, his father, plans to use that money to buy a new car for Carl. “We’re definitely looking forward to it,” he mentioned, “and hopefully we can find the perfect one.” With tax day approaching on April 15, many early filers are getting back larger refunds. This year’s average tax refund is $3,521, which is about an 11% increase compared to last year, according to the Internal Revenue Service. As more returns come in, these figures might shift slightly.
This uptick largely stems from Republican tax cuts in the One Big Beautiful Bill Act of 2025, which have raised average refunds by approximately $350. The Tax and Spend Act expanded the standard deduction and enhanced the child tax credit, but it also implies that tips and overtime pay may decrease.
David Tinsley, a senior economist at the Bank of America Institute, noted that people often enter a spending spree when they receive their refunds. “It’s like a sugar rush,” he pointed out. And, this year, the number of refunds is significantly higher.
According to the institute’s credit and debit card data, discretionary spending is increasing. Early filers are spending more on things like electrical appliances, hotels, and restaurants than they were a year ago.
However, it’s not all about fun and luxuries. Many Americans use their refunds to cover essential expenses such as groceries and rent, pay down credit card debt, or bolster their savings. A report indicated that about two-thirds of filers consider their refund either very or somewhat crucial to their financial well-being, and the number of people relying on these refunds appears to be growing.
“People aren’t just splurging on their refunds; they’re typically focusing on necessities,” said Matt Schultz, a chief consumer finance analyst at LendingTree.
Some early filers are feeling the pinch, as they are facing higher fees. For example, Sarah Granderson, a recent Jacksonville State University graduate, put her $400 refund into stocks. Nevertheless, it doesn’t feel much like extra money, given her fuel expenses. “It’s like the money is just going back to my gas bill,” she remarked.
Researchers at the Stanford Economic Policy Institute have estimated that households could pay an additional $740 in gas costs this year, particularly if the Strait of Hormuz remains closed for even just a few weeks—which, based on current trends, seems likely.
While refunds are indeed on the rise this year, the increase isn’t as significant as analysts from the Bank of America Research Institute had anticipated. They had predicted that average earnings would be nearly 25% higher than last year. Tinsley noted, “It’s still positive, but likely not as much as people expected.” This difference might be due to the timing since millions haven’t yet filed their taxes; however, IRS stats indicate this year’s refunds are being compared to those at a similar point last tax season.
Expert Tips for Your Refund
For those still undecided on what to do with their tax refund, personal finance experts have some recommendations.
Mandy Woodruff, host of the brown ambition personal finance podcast, suggests tackling your highest-interest debts first, typically credit cards. “The interest rates can be astronomical, making it tough to pay back,” she advised.
If your emergency savings aren’t up to snuff—think three to six months’ worth—Rich Guerrini, head of PNC Wealth Management, recommends using your refund to strengthen that financial cushion. “This is a priority,” he emphasized. “Unexpected expenses can pop up.”
While investing your refund in the market is an option, Guerrini also encourages investing in personal growth, like certifications that may boost your earning potential. “Investing in yourself is often the highest return investment,” he stated.
As for a little indulgence, Woodruff believes it’s perfectly acceptable to use part of your refund for self-care and the remainder to tackle debts. “Just because you owe money doesn’t mean you can’t treat yourself occasionally,” she remarked.
