Every tax filing season, millions of Americans receive tax refunds.
These are issued to taxpayers who paid more throughout the year than they owed, according to the Internal Revenue Service. More than 102 million refunds were issued this tax season, according to IRS data through October 17. The average refund amount was $3,052 in 2025, up slightly from $3,004 in 2024.
Taxpayers who e-file could have their refund processed within 21 days, and those who mail tax returns could get their refund within six weeks, according to the IRS. You can receive your refund through several methods, though the fastest way is direct deposit.
Your tax refund can help boost your financial future. It’s important to have a plan in place for your tax refund before you receive it, according to Dr. Miranda Reiter, an assistant professor at the Texas Tech University School of Financial Planning.
“If you’re able to mentally commit the money to a financial goal before it’s in your account, you may be less likely to spend it on something that does not serve your future self,” Reiter told The Independent, via email. Here are three tips on how to use your tax refund to boost your finances.
Contribute to (or start) your emergency fund
An emergency fund is money squirreled away for unexpected events that would otherwise leave a hole in your finances. These situations might include losing your job or recovering from an illness.
“If you’re not using your tax refund money for immediate and essential expenses, such as food or costs associated with housing, you should consider contributing to your emergency fund,” Reiter said.
Many experts recommend saving at least three months of essential expenses in your emergency fund. But if that’s an unrealistic number for you, Reiter suggests starting small with achievable goals.
“For example, if you have nothing saved, strive to $100 and make a plan for increasing it soon,” she said. “If you already have $400, make your next goal $1,000 and so on.”
Pay down debt
Tax refunds can help you pay down existing debts, too.
“Because debt that’s carried over month after month, such as credit cards and student loans, can hinder saving for bigger goals, like buying a house or saving consistently, it is crucial to tackle it early and often when possible,” Reiter said.
Reiter suggests using your tax refund to pay off the principal, which refers to the original amount of the loan. Interest is calculated based on the principal amount, so paying it off helps lower the overall cost of that debt.
“Paying off debt could be a double benefit, as it simultaneously lowers your debt while possibly having a positive impact on your credit score,” she said.
Boost your retirement savings
It’s also a smart move to add your tax refund to your retirement savings, Reiter explained.
Only 35 percent of Americans believe their retirement savings are on track, according to a 2024 Federal Reserve survey. This makes it an area where “most people can make some meaningful progress in setting themselves up for future success,” Reiter explained.
“One of the easiest ways to do this is to make a contribution to an IRA, but be sure to check any contribution and income limits,” she said.
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