Having a son who works for H&R Block has its perks, like getting him to handle your own filings. This tax season, 23-year-old Carl Matthew Moral got his parents an estimated $3,700 back.
Now his father, Jimmy Moral, is planning on putting that refund money toward a new car for his son. "Well, we're excited to receive it," he said. "And hopefully we'll find the right car for him." Tax Day, on April 15, is now less than two weeks away, and many early filers are seeing bigger refunds. The average tax refund so far this year is $3,521, up about 11% from the same time last year, according to the Internal Revenue Service. These numbers may shift a bit over the coming weeks, as more returns are processed.
The Republican tax cuts in the 2025 One Big Beautiful Bill Act are mainly responsible for the bump, worth about $350 on average so far. The tax and spending law expanded the standard deduction and increased the child tax credit. It also gave deductions for tips and overtime.
Americans typically go into spending mode once they get their refund, says David Tinsley, Bank of America Institute's senior economist. "There is a kind of sugar-rush effect," he says.
And this year, refund recipients are enjoying a bigger spike.
Discretionary spending is up, according to credit and debit card data from the institute. Early filers spent more on electronics, hotels, lodgings and restaurants than they did a year prior.
Yet those refunds are not being spent on pleasure alone. The data shows that Americans also paid off credit card debt and topped off their savings accounts, along with paying for essentials like groceries and rent.
About two-thirds of filers said their tax refund was either very or somewhat important for their financial situation, according to a survey by LendingTree. And a growing share of respondents in that survey said they rely on their refund.
"People aren't just going out and blowing their tax refund on fun and existing stuff," says Matt Schulz, chief consumer finance analyst at LendingTree. "They're generally putting it toward essentials."
Some early filers feel that their refunds are being canceled out by the higher prices they're paying at the pump.
Sarah Granderson, a recent Jacksonville State University graduate, invested her $400 refund in stocks. Still, she says her refund doesn't feel like a windfall because she's spending just as much to fuel her car. "Even though I did get the money back for taxes, it does feel like that money has gone straight back to my gas," she says.
Researchers at the Stanford Institute for Economic Policy Research estimated that households will pay $740 more for gas this year — and that was assuming the Strait of Hormuz was closed for only three weeks, a marker that has already been surpassed.
While refunds are bigger this year, that bump is not as large as analysts at the Bank of America Institute had expected. Based on government estimates, the institute had predicted that the average return would be closer to 25% higher than last year's.
"It's still net positive, but it's probably not as positive as people were hoping for," says Tinsley.
The difference could be explained by timing, since millions of Americans have yet to file their taxes or receive their refunds. But that's not the most likely explanation, since the IRS statistics compare this year's refunds with those at the same point in last year's tax season.
Expert advice on what to do with a refund
If you're still deciding how to spend a tax refund, personal finance experts offer a few tips.
Pay off your highest-interest debt first, usually credit card debt, says Mandi Woodruff, host of the Brown Ambition personal finance podcast. "Those rates are astronomical, and it can be the most debilitating kind of debt to pay off," she says.
If you don't have three to six months' worth of emergency expenses set aside in savings, consider using your refund to boost that safety net, says Rich Guerrini, head of PNC Wealth Management. "This is a big, big priority," says Guerrini. "There are things that happen that you ultimately can't plan out."
You can invest your refund in the market, but Guerrini says to also consider investing in yourself, such as in a certificate course that will eventually help you earn more money in your career. "Investing in you probably has the best return on investment of anything," Guerrini said.
Woodruff says it's also OK to treat yourself with part of your refund — while still using the rest to pay down debt. "Just because you have debt doesn't mean you're not a human being who deserves some time off," Woodruff says.
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