Takeaways from the Key Takeaways
- More Americans are concerned about the high cost to live, and more than half view their tax refund as an essential.
- Taxpayers will receive higher refunds than usual this year. They plan to use the money to buy necessities or pay off debt and bills.
- Some taxpayers delay filing their tax returns out of fear that they will owe the government money.
More than half of Americans view this year’s tax returns as a necessity, rather than a bonus, because inflation is making it harder to afford the cost of living.
According to IRS data, the average refund was $3324. This is 5.7% more than last year at the same time. Predictions show that this year taxpayers could receive the largest refund in recent history. This is not likely to be a big bonus for most 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.
According to a Trustpilot survey, an online review platform, almost 8 out of 10 Americans said inflation and cost of living were their biggest financial worries. And 47% said that their refund would impact whether they could afford essentials. This is 12 percentage points more than the previous year.
In addition, more taxpayers delayed filing their 2024 return out of fear that they would owe the government money. This increased to 28% in 2025 compared to just 12% in 2024.
Younger taxpayers rely more on their refunds for essentials. Half of taxpayers between 18-34 years old plan to use the refund to buy essentials. 35% of those between 35-54 years old and 20% of those 55+ will do so. In addition, 40% say they will struggle if they do not get a tax refund, compared with 10% of those over 55.
