Many Americans will rely on tax refunds to make ends meet, despite shrinking refunds 

  • 30% of Americans say they’re reliant on their tax refund to make ends meet in 2023, especially Gen Z and millennials
  • Despite fewer pandemic tax credits, 29% of Americans expect a higher tax refund this year
  • Nearly a quarter of American taxpayers plan to use their tax refund to pay for necessities (24%)

It’s the start of 2023, marking the unofficial start of tax season. Now, consumers who have all of their paperwork in hand can begin filing their 2022 tax returns and submit as soon as the IRS opens for business, which typically happens the last week of January. However, with new laws going into effect this tax season, many are being advised to hold off on filing until at least the end of February. This could spell trouble for those who are reliant on their tax refund to make ends meet this year. 

According to a study conducted by Qualtrics on behalf of Credit Karma, 30% of Americans say they’re reliant on their tax refund to make ends meet in 2023. This was especially common among Gen Z and millennial respondents, of which 40% of Zoomers and 46% of millennials said they were reliant on their tax refunds to make ends meet. Americans’ dependence on tax refunds isn’t new, however, following a year of record inflation and the rising cost of living, it’s possible consumers’ finances are in worse shape than normal. In fact, more than two-thirds of Americans say their finances did not improve or stayed the same in 2022 (68%).  

Tax refunds are often the biggest paycheck of the year for most Americans and, despite changes to the tax code and fewer pandemic related tax credits available to filers, many taxpayers are still banking on higher tax refunds this year. According to the study, 29% of American taxpayers expect a higher tax refund this year compared to last. Younger demographics were more likely to report expectations of higher tax returns this year, 45% of Gen Z and 44% of millennials. However, hopeful taxpayers could be in for a surprise with average refunds expected to be down roughly 16% this year

The good news? Americans are making smart choices when it comes to how they plan to use their refund this year with many vowing to use their refund to build savings (37%) and pay down debt (31%). This is important when you consider the biggest financial mistake made by Americans last year was not saving any money (40%) followed by not sticking to a budget (33%) and racking up debt (21%). Outside of building savings and paying down debt, many plan to use their refund to pay for essentials, like rent, utilities and other bills (24%), further indication of Americans being reliant on their tax refunds this year. 

“Nearly three quarters of Americans are expecting a tax refund this year and, for many, it will be the most significant financial windfall of their year,” said Courtney Alev, consumer financial advocate at Credit Karma. “That’s why it’s important to make a plan for your refund. If you’re unsure if you’ll receive a refund this year there are a number of free online tools you can use, such as Credit Karma’s Tax Refund Estimator, to estimate your refund and get a sense of how much money you’re owed. From there, take a look at your full financial picture to determine how to allocate your funds in a way that aligns with your financial goals for 2023. For example, if you’re someone who racked up debt during the holidays and you’re expecting a refund this tax season, consider putting some or all of your refund toward paying down debt. This will help you jumpstart your debt repayment strategy, and could help limit the amount of interest you accrue.” 


This survey was conducted online within the United States by Qualtrics on behalf of Credit Karma on December 6, 2022 among 1,009 adults ages 18 and older.