Americans blow their tax refunds as if it’s “free money,” study finds 

  • A quarter of American taxpayers consider their tax refund as “free money” 
  • More than a quarter (28%) of filers who received a refund have already used all of their refund
  • 26% of tax filers already used or plan to use their refund to splurge on things they otherwise wouldn’t buy

Tax Day is looming and, while many Americans have already filed their taxes, many still have yet to submit their returns. In the first six weeks of tax season, the IRS paid $135 billion in tax refunds to American taxpayers. The question is how did they use it and how much of their refunds remain? 

According to a study conducted by Qualtrics on behalf of Intuit Credit Karma, 65% of American taxpayers have already filed their taxes this year and three-quarters of those who have filed received a refund – but many aren’t satisfied. Nearly half (45%) of those who have already filed their taxes say they’re disappointed in the size of their rebate. Regardless, nearly two-thirds (64%) of taxpayers who received a refund this year have already spent some or all of their refund with 28% reporting their refund is all gone.  

Some taxpayers who received a refund used the money to make financial progress, while others used the cash to pay for necessities or splurge on nonessentials. According to the study, 41% of taxpayers who received a refund put some or all of the money into savings and 27% put their refund towards paying down debt. As expected, more than one-third (34%) of Americans used their tax refund to pay for necessities, including recurring bills, rent and groceries while others used their refund on things like travel and nonessentials, including dining out, clothing and jewelry (17%).

Speaking of splurging…

Among taxpayers, more than a quarter (26%) reported they already used or plan to use their refund to splurge on things they otherwise wouldn’t buy, such as clothing and accessories (45%), electronics (40%) and shoes (37%). This trend was more pronounced among younger generations, with 39% of Gen Z and 36% of millennials admitting plans to splurge. 

This splurging behavior could have something to do with Americans’ perception of their tax refund. According to the study, a quarter of American taxpayers consider their tax refund to be “free money” with Gen Z and millennials being most likely to feel this way (35% and 29% respectively). 

For those who might owe, the concern is real. 

Nearly a quarter (24%) of taxpayers are worried they won’t be able to afford their tax bill this year. Of those who have filed their taxes and didn’t receive a refund, nearly half (49%) said they owed money in taxes this year. How did they pay? The majority (54%) used money, or plan to use money, they had in their checking account to cover the bill. However, others had to rely on credit and savings to pay their taxes. 

According to the study, one-in-five taxpayers planned to pay their taxes using some form of credit, including credit cards, personal loans and balance transfer cards. Another 29% say they used or plan to use money from their savings account, with another 10% saying they dipped into, or plan to dip into, their emergency savings to cover the cost. 

Filing a return, checking it twice.

When it comes to mistakes, 67% of American taxpayers worry they will make a mistake on their taxes, or have already made a mistake, this tax season. Of those, 33% are worried about missing out on credits and deductions that could lower their tax liability. Meanwhile, others are worried about making math mistakes (21%), forgetting important paperwork (22%) or entering information inaccurately (20%). Worth noting, one of the top mistakes Gen Z is worried about is missing the tax filing deadline (30%). 

For those reading at home, the IRS deadline to file federal taxes is April 15th, but for certain taxpayers has been extended. For the latest information, see 

“Tax refunds are often the biggest windfall of the year for many Americans,” said Courtney Alev, consumer financial advocate and head of tax at Intuit Credit Karma. “With the rising cost of living we continue to see more and more people use their refund to pay for necessities, which likely means fewer Americans are making progress on their other financial goals like building savings and paying down debt. In fact, we’ve seen credit card debt levels rise 37% since March 2022 when the Fed first increased rates. For those who fall into the camp of thinking tax refunds are “free money,” remember, a tax refund is money owed back to you from what you overpaid to the government throughout the year. If you’re tempted to splurge and feel like your refund is burning a hole in your pocket, consider allocating a small amount – perhaps 10% – to treat yourself to something fun. Putting the other 90% to necessities and financial goals can help you get on the right financial track in 2024. If you want more money in your pocket throughout the year to avoid getting a tax refund each year, talk with your employer about how to adjust your withholdings.” 


This survey was conducted online within the United States by Qualtrics on behalf of Intuit Credit Karma on March 13 to March 18, 2024 among 1,985 adults ages 18 and older who plan to file their taxes this tax season.