KEY TAKEAWAYS
- As more Americans worry about the high cost of living, more than half see their tax refund as a necessity.
- Taxpayers are predicted to receive higher refunds this year, which they said they will most likely use on necessities or to pay off bills and debt.
- Additionally, some taxpayers are delaying filing their tax returns for fear of owing the government money.
As inflation makes the cost of living harder to afford, more than half of Americans see this year’s tax refunds as a necessity rather than a bonus.
As of March 7, the average refund amount was $3,324, according to data from the IRS. That is 5.7% higher than the same time last year, and predictions show this year, taxpayers may receive the highest refund in recent years. However, this likely won’t be a bonus for many households.
More taxpayers expect to use their refunds for necessities this year as the costs of living continue to increase, inflation remains stubbornly high, and the Federal Reserve hesitates to cut interest rates.
Almost 8 in 10 Americans cited inflation and the cost of living as their biggest financial worry, and 47% said their refund would affect whether they could afford essentials, according to a survey by Trustpilot, a reviewing platform. That is 12 percentage points higher than the year before.
Additionally, more taxpayers have delayed filing their 2024 tax return for fear of owing the government money, 28% in 2025, compared to 12% in 2024.
Younger taxpayers are more likely to rely on their refund for essentials. Half of taxpayers aged 18-34 plan to use their refund for essentials, compared to 35% of those aged 35-54 and 20% for those 55 and older. In addition, 40% of younger taxpayers say they would struggle if they don’t get a refund, compared to 10% of those 55 and older.
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