- Roughly half (49%) of taxpayers surveyed are more dependent on their tax refund to make ends meet this year than they have in the past, rising to 57% of millennials.
- Americans have used their refund to pay for necessities (41%), pay down debt (35%) and build their savings (25%).
- 41% of Gen X and a quarter (25%) of Gen Z expect to take on debt to pay their tax bills.
This year, tax refunds have served as a lifeline for many Americans who are dependent on this windfall to make ends meet. While some people think of their tax refund as “free money,” today’s cost of living has made it so many have less of a choice in how they use those funds.
According to a new study conducted by Qualtrics on behalf of Intuit Credit Karma, 61% of Americans surveyed have filed their taxes, and 47% have received their tax refund. In fact, a majority of people who received their refunds already, used a service or product to access their refund early (64%), including nearly three quarters (72%) of millennials.
For older Americans, their motivation to get their refund early doesn’t go that deep – 64% of boomers+ admit they just wanted their refund early. However, younger Americans may have had less of a choice. More than one-third (37%) of millennials say they needed their refund early to buy essential items like groceries, and 30% of millennials and Gen X needed to pay important bills. More than a quarter (28%) of Gen Z needed their refund to pay for expenses they’ve been delaying, such as a car repair, and a quarter (25%) of Gen Z and millennials needed to pay down high-interest debt.
Of the 82% of taxpayers who have used some or all of their refund, usage behaviors match those who accessed their refund early. As expected, 41% of Americans who have spent their tax refund, used it to pay for necessities, while others used it to pay down debt (35%) and put it into a savings account (25%).
While half of Americans (49%) are even more dependent on their refund to make ends meet this year than in years past, nearly one-third (31%) view their refund as “free money,” and their spending habits likely mirror the portion of Americans who said they used their refund to pay for travel (16%), non-essentials (14%) and experiences, like concerts or sporting events (12%).
Regardless of how people chose to spend their refund, many were underwhelmed with the amount they pocketed. Two in five (40%) taxpayers who received a refund were disappointed by the size, including half (50%) of Gen Z, and 46% of people say their tax refund was lower than last year’s.
Those who owe face sticker shock
Among tax filers who are not expecting a refund this year, 59% owe the IRS, which likely came as a shock to the 30% who did not expect to owe money this tax season. Likely to their chagrin, 54% owe more this year than they did last year. Luckily, half (51%) of those who owe money will pull from their checking account to pay their bill, but nearly a quarter (23%) will need to dip into their savings.
While more than three quarters (76%) of taxpayers don’t expect to take on debt to pay their tax bill, one in five (20%) do. Gen X is especially likely to take on debt to pay their bill (41%), as well as 35% of those with less than $50K in household income and 25% of Gen Z.
Millennials aren’t immune to tax scams
Potential tax scams are top of mind for many Americans, including the 40% who admit they are worried about being victims of tax fraud and scams. These concerns have people taking proactive measures to avoid such a fate, including roughly half (52%) of filers who say they always file early to avoid tax fraud and scams, while 62% say they’ve taken steps to protect themselves. Some of these steps include keeping tax documents secure (67%), not clicking on links from unknown senders (64%), never sharing personal information over the phone/email (63%) or on social media (61%), using secure website and Wi-Fi networks (52%), updating software (48%) and researching common scams (32%).
Millennials seem to be the unlucky ones when it comes to tax scams, with roughly one in seven (15%) admitting they’ve been a victim of tax fraud/scams in the last few years, which resulted in serious consequences, including identity theft (41%), legal proceedings (36%) and financial losses (36%), to name a few. For one in five (20%) millennials, financial losses exceeded $5,000.
“The many Americans not only choosing to receive their tax refunds early this year, but also using them for essentials, bills, and debt repayment is proof that people are feeling financially burdened, and struggling to keep up with the rising cost of living,” said Courtney Alev, consumer financial advocate at Intuit Credit Karma. “Even if it’s forced by current economic circumstances, it also reflects responsible money management, as people are prioritizing needs over wants. A tax refund is a great opportunity to improve your financial health, so for those still awaiting their refund, I suggest allocating no more than 10-20% for enjoyment and putting the remainder toward things like paying down debt or building an emergency fund.”
Methodology:
This survey was conducted online within the United States by Qualtrics on behalf of Intuit Credit Karma on March 10, 2025 to March 12, 2025 among 1,003 adults ages 18 and older.