Majority Of Americans Plan To Spend Tax Refund On Necessities

(MENAFN- SWNS Digital)

By Joseph Staples // SWNS

NEWS COPY W/ video + INFOGRAPHIC

A new study has found a third of Americans plan out what to spend their tax refund on half of a year in advance.

The new poll of 2,000 U.S. taxpayers found 79% believe they'll get some sort of refund this year, and many of them have already planned out what to spend it on.

A majority (52%) said their tax refund is an important part of their budgeting plans, and 77% plan to spend their refund on necessities.

Chief among necessities were bills like rent (52%), groceries and essential items (44%) and credit card debt (37%).

Over half (56%) of those spending their refund money on credit card debt are specifically targeting their holiday season purchases.

Meanwhile, 8% are planning to spend their refund on luxuries. They're spending their refund on new clothes (37%), entertainment (28%) and new phones (26%).

Commissioned by TaxSlayer and conducted by Talker Research, the study found the average person hopes to receive roughly $1,700 in tax refund money this year.

A fifth (22%) believe they'll end up with more money this year than last, while 26% believe the opposite. Half (51%) expect to receive about the same amount.

Last year, 12% said they got a larger-than-expected tax refund, while 20% recalled getting less than what they expected.

Many respondents expecting to receive more this year said it was due to withholding more money on their W-2, making more money in the past year and having a newborn.

And those expecting to receive less shared potential causes why: losing their job, owing back taxes, children aging into adulthood and increased tax rates.

“Collectively, people are learning to strategize better where their refunds are going,” said Seth Babb, head of consumer product at TaxSlayer.“By planning ahead, people are reducing the stress associated with taxes and, in some cases, creating excitement.”

The study also found that, while 54% plan to file their taxes by the deadline, 43% are actually planning to file early.

Early filers said they're motivated by receiving their refund earlier than others (55%), not needing to deal with the stress of doing it before April 15 (43%) and having filed early last year (24%).

As they prepare to file this year, 37% said they plan to use a DIY tax software and 19% are opting to do it manually.

“Filing early is a big part of reducing the tax-related stress,” continued Babb.“The earlier people file, the earlier they can access their refunds and spend it as planned.”

WHAT ARE THE TOP NECESSITIES AND LUXURIES PEOPLE SPEND THEIR REFUNDS ON?

Respondents were asked to choose all the necessities and luxuries they would spend their refunds on. Here's what they said:

NECESSITIES

• Bills, like rent and utilities - 52%
• Groceries and essential goods - 44%
• Credit card debt - 37%
• Savings accounts - 22%
• Home repair/improvement - 20%

LUXURIES

• New clothes - 37%
• Entertainment - 28%
• A new phone - 26%
• Buying gifts for people close to me - 24%
• A night out on the town - 23%

Survey methodology:

Talker Research surveyed 2,000 taxpaying Americans; the survey was commissioned by TaxSlayer and administered and conducted online by Talker Research between Dec. 13 and Dec. 20, 2024.

We are sourcing from a non-probability frame and the two main sources we use are:

• Traditional online access panels - where respondents opt-in to take part in online market research for an incentive
• Programmatic - where respondents are online and are given the option to take part in a survey to receive a virtual incentive usually related to the online activity they are engaging in

Those who did not fit the specified sample were terminated from the survey. As the survey is fielded, dynamic online sampling is used, adjusting targeting to achieve the quotas specified as part of the sampling plan.

Regardless of which sources a respondent came from, they were directed to an Online Survey, where the survey was conducted in English; a link to the questionnaire can be shared upon request. Respondents were awarded points for completing the survey. These points have a small cash-equivalent monetary value.

Cells are only reported on for analysis if they have a minimum of 80 respondents, and statistical significance is calculated at the 95% level. Data is not weighted, but quotas and other parameters are put in place to reach the desired sample.

Interviews are excluded from the final analysis if they failed quality-checking measures. This includes:

• Speeders: Respondents who complete the survey in a time that is quicker than one-third of the median length of interview are disqualified as speeders
• Open ends: All verbatim responses (full open-ended questions as well as other please specify options) are checked for inappropriate or irrelevant text
• Bots: Captcha is enabled on surveys, which allows the research team to identify and disqualify bots
• Duplicates: Survey software has“deduping” based on digital fingerprinting, which ensures nobody is allowed to take the survey more than once

It is worth noting that this survey was only available to individuals with internet access, and the results may not be generalizable to those without internet access.

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