Consumers using tax refunds to pay down debt and save this year

“Tax return season is a time when consumers plan and prioritize financially, whether it is paying down debt or saving for a rainy day.”

Matthew Shay
NRF President and CEO

WASHINGTON – More Americans than ever plan to hold on to their tax refunds this year rather than spending the money they get from the IRS, according to the annual tax refund survey released today by the National Retail Federation and Prosper Insights & Analytics.

“Tax return season is a time when consumers plan and prioritize financially, whether it is paying down debt or saving for a rainy day,” NRF President and CEO Matthew Shay said. “With the passage of tax reform and the expectation of more disposable income, we expect to see consumers prioritizing how and when they spend their hard earned dollars, especially during the back-to-school and holiday seasons.”

Of the 65 percent of taxpayers expecting a refund, 49 percent say they will put it into savings. That’s up from 48 percent last year and the highest level in the 12-year history of the survey. Meanwhile, 35 percent will pay down debt, in line with last year and the lowest level since 2016 — all far below the peak of 48 percent seen during the recession in 2009.


Only 22 percent will spend this year’s refunds on everyday expenses, the second-lowest level in survey history after last year’s 21 percent. Beyond that, 12 percent will use the money for a vacation; 10 percent will “splurge” on dining out, trips to a spa or apparel; 9 percent will invest in home improvements; and 8 percent will make major purchases ranging from a television or furniture to a car.

“Younger consumers are being more mindful about their hard-earned money, especially those 18-24 who have already filed their taxes this year, higher than any other age group,” Prosper Executive Vice President of Strategy Phil Rist said. “Although this group is focused on allocating a portion of their refunds to savings, they are also more likely to use them for everyday expenses compared with any other age group.”

According to the survey, 67 percent of Americans file their taxes online, with 39 percent using computer software, 20 percent hiring an accountant, 17 percent going to a tax preparation service, 14 percent preparing their taxes manually and 9 percent seeking help from a spouse, friend or relative. Among those using a tax preparation service, consumers are spending $5.7 billion on tax services — an average $132.93 per person, up slightly from last year’s $131.66.

Of those surveyed, 59 percent have already filed their taxes or expect do to so by the end of February while 27 percent will file in March and 14 percent in April.

The survey, which asked 7,657 consumers about their tax return plans, was conducted February 5-13 and has a margin of error of plus or minus 1.1 percentage points.

About Prosper Insights & Analytics
Prosper Insights & Analytics is a global leader in consumer intent data serving the financial services, marketing technology, and retail industries. We provide global authoritative market information on U.S. and China consumers via curated insights and analytics. By integrating a variety of data including economic, behavioral and attitudinal data, Prosper helps companies accurately predict consumers’ future behavior to help identify market behaviors, optimize marketing efforts, and improve the effectiveness of demand generation campaigns.

About NRF
The National Retail Federation is the world’s largest retail trade association. Based in Washington, D.C., NRF represents discount and department stores, home goods and specialty stores, Main Street merchants, grocers, wholesalers, chain restaurants and internet retailers from the United States and more than 45 countries. Retail is the nation’s largest private-sector employer, supporting one in four U.S. jobs — 42 million working Americans. Contributing $2.6 trillion to annual GDP, retail is a daily barometer for the nation’s economy.