Why Tax Season 2026 Is a Perfect Time to Seek Debt Relief

If you’re looking forward to getting money back after filing taxes in April, you’re not alone. In 2025, the IRS sent refunds to more than 103 million taxpayers, and the average refund amount was $3,167. 

Getting a tax refund might feel like free money, and it can be exciting to get that windfall—you might already have plans on how you want to spend the money. 

Before you decide where it should go, consider the big picture. There are several good reasons why using your tax refund to pay off debt or get debt relief is likely the best move for your finances.   

Let’s look at why tax time could be the perfect chance to tackle your debt.

Tax Season Can Give You a Clearer Picture of Your Finances 

Filing taxes is important, not just for balancing the books with the IRS, but for checking in on your overall finances. When filing taxes and receiving your refund, you might want to ask yourself: 

• Did you get a bigger or smaller refund than you expected? 

• Did you make more or less money than last year?

• Did you get to use any special tax credits or deductions? 

• Did you save as much for retirement as you would like? 

• How is your financial life changing—have you gotten married or divorced, have you welcomed a new child, or are your children getting older and aging out of the child tax credit?

• What financial goals do you have for the future—building an emergency fund, buying a house, paying off a car loan, getting out of debt? 

Not every part of your personal finances shows up on your tax return, and that’s fine. But filling out your IRS tax forms and waiting for your refund can be a good moment to reflect on what’s going well in your financial life, and what you might like to change. 

Tax Season Might Give You Extra Cash to Pay Off Debt 

April is not just the annual IRS tax filing deadline—it’s also the season when millions of Americans get refund money in their bank accounts. The average tax refund might be the biggest cash windfall that many of us get each year. It’s often like an extra paycheck, an annual bonus, or an invisible savings account that appears all at once. 

What are you going to do with your extra money? According to a survey from Experian, here’s how people planned to use their tax refund money in 2025: 

• Save it: 31% of people surveyed 

• Pay down debt: 21%

• Spend on everyday necessities and expenses: 21%

• Invest it: 10%

• Splurge on something: 9%

• Home improvement: 7%

• Major purchase (car, home, etc.): 3%

Paying down debt was the second-most popular choice, and it’s a good choice. Because if you have “free money” that appears in your bank account, it’s often a good idea to use that cash to get rid of debt that is costing you money in interest. 

Think of your tax refund as a 0% interest loan from your past self. All year you worked to save that money by sending it to the IRS. Now you can use it to get rid of credit card debt that might be costing you 25% interest or more. 

Use Your Refund to Get Rid of High-Interest Debt

Once you’ve decided to use your tax refund to pay off debt, you need to decide where it will do the most good. If you have high-interest debt, like credit cards, it's typically best to start there.

You'll generally save the most money by paying off your debts with the highest interest rates first. Or you could pay off a smaller balance or two completely for a hit of motivation and to simplify your life. Either method is good as long as you're getting rid of expensive debt.

If you're struggling to even make your minimums each month, though, there might be a better way to use your tax refund. Instead of throwing it at debts you don't think you'll ever repay, it could be how you jumpstart a debt settlement fund.

During debt settlement, you negotiate with creditors and ask them to accept less than you owe. They might agree if you're already behind on your debts and the creditor doesn't think you can afford to pay more. You can try to negotiate debt settlement on your own, or you could hire a professional debt relief program. 

Settlement often works best when you can offer a lump sum payment. For example, if you owe $10,000 on a credit card and you can’t afford to pay it back, you might offer the creditor $5,000 cash—but you need to have that full $5,000 ready and waiting to go if the creditor agrees. If you’ve received a $3,000 tax refund, you could already be 60% of the way to having enough cash for that settlement offer.

This tax season, use your tax refund to pay off debt—and improve your personal finances. If you’re struggling with debt, think about using debt relief to get to a better place in life. Hopefully by next tax season, you’ll be seeing progress with your debts and building a stronger financial future.