Most Americans receiving tax refunds this season plan to save or pay off debt rather than spend, even as refund amounts climb higher than last year, according to an Experian survey published in March.
The IRS reported an average refund of $3,676 through early March, 10% higher than the $3,324 average during the same period last year. Nearly three-fourths of filers, about 43 million of 59 million processed returns, had already received refunds.
Experian surveyed 1,000 consumers on March 4 and 5, 2026, on how they planned to use their 2025 federal tax refunds. About 40% said they planned to save or invest their refund. An additional 20% said they would use it to pay down debt. Just 6% planned discretionary or splurge spending, down 3 percentage points from last year.
Income shaped how respondents planned to use their refunds. Households earning under $50,000 annually were more likely to put refunds toward everyday expenses. Those earning between $50,000 and $100,000 leaned toward paying down debt. Households earning above $100,000 showed greater interest in investing.
Bigger Refunds, Same Cautious Habits
Yet larger refunds are not changing behaviour.Experian found spending intentions nearly identical to last year’s survey. Dining out and entertainment remain the first casualties of tighter budgets. Even groceries and streaming subscriptions are seeing cutbacks.
Rising Costs Undercut Refund Gains
The bump in refunds is arriving alongside surging prices. Energy costs have surged since the U.S.-Iran conflict began restricting oil shipments through the Strait of Hormuz, through which roughly one-fifth of the world’s oil typically flows. Regular gasoline now averages $4.15 nationally, up 39% since before the war started.
Food prices are also set to accelerate. Average inflation for food and beverage companies surged 7.9% year over year in March, the biggest jump in at least 12 months, according to The Kobeissi Letter. Tomatoes saw a 102% price jump year over year, while diesel costs rose 88%. Urea, the world’s most widely used nitrogen fertilizer, has doubled in price since February to approximately $900 per metric ton, the highest since 2022. Economists warn the full impact on grocery store shelves has not yet been felt.
Nearly 80% of Americans are already cutting spending due to higher gas prices, with 40% reducing essentials like groceries.
Experian noted that since overwithholding in 2025 was likely a one-time event, refunds in spring 2027 may drift lower.
Disclaimer: This content was produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo courtesy: Shutterstock
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