Survey: How Americans Spend Their Tax Refunds
ByJohn Russo
UpdatedJul 1, 2025
- A Freedom Debt Relief survey found that most Americans spent their tax refunds to pay down debts.
- 30% spent their refunds on other items.
- And 22% put some or all of their refund into savings.
Table of Contents
Every year, studies are conducted on how Americans spend their tax refunds. But this year, a new tax law went into effect that you might think would change those results…if people actually knew about it. However, since most Americans are confused or ill-informed about tax reform, those spending plans might have to change. So, how do taxpayers plan to spend their refunds, and how might the recent reforms affect those expectations?
How will Americans spend their tax refunds?
From paying off debt to saving money or going on a vacation, the answer to that question varies depending on who you ask. For example, a recent Freedom Debt Relief survey showed that 42% of women and 40% of men of all generations stated they would use their refunds to pay off debt. An additional 27% of women and 24% of men said they would sock the money away into a savings account.
42% of women and 40% of men of all generations stated they would use their refunds to pay off debt.
Can your tax refund fix your finances?
No matter how they plan to use their money, many Americans see tax refunds as a much-needed cash infusion that will help them manage their finances. But unfortunately, while a majority of the survey’s respondents stated that they would use their refund to pay off debt, 42% of people said that they have about the same amount of credit card debt this year as they did last year. Similarly, a combined 54% stated that they would find it difficult (32%) or very difficult (22%) to pay for an unexpected $500 expense. And yet, only 26% plan to put their tax refund toward savings.
While your tax refund usually can’t fix your financial woes, it can make a dent if it’s part of a detailed, thoughtful plan grounded in the realities of your particular situation.
Are Americans informed about tax reform?
Speaking of reality, it’s important to know how recent changes to tax law could affect your refund. Unfortunately, while these reforms made headlines over the past year, many Americans may remain uninformed about how the new tax rules could affect them. In fact, 37% of people felt they were not at all informed about the 2018 Tax Reform. An additional 43% stated they were only slightly informed.
And, despite the U.S. Government Accountability Office’s (GAO) warning that taxpayers should reassess their 2018 withholdings, only 15% of Americans said they had changed their withholdings. So, now a majority of people of all generations still think that their tax refunds will be about the same as last year. And some will be disappointed.
Tax reforms that could affect your refund
So, what are some of the changes that could alter how Americans spend their tax refund this year? To sum it up, the new law lowers tax rates in most brackets, doubles the standard deduction, and overhauls many old tax rules. If you haven’t had a chance to file your taxes yet, here is an overview of some of the biggest changes happening this tax season:
The standard deduction, also known as the amount of income that is not subject to income tax, has increased this year. For single filers, it is now $12,000. For joint filers, it is $24,000. For the head of the household, it is $18,000.
Many itemized deductions have been suspended this year, including investment expenses, alimony deductions, personal casualty and theft losses, and mortgage interest deductions.
Personal exemptions, or the amount you can deduct for yourself and your dependents, have been eliminated.
Tax rates have changed as much as 4% in each tax bracket.
In sum, it’s great to have a spending plan for your tax refund, especially one that involves paying off debt. However, it’s also important for that plan to be one based in reality — the realities of your financial situation, and of the tax laws affecting the amount of your refund.
Get help planning your financial future
Making the decision to take control of your finances and get out of debt is a great first step toward a more stable financial future, whether your tax refund is involved or not. And luckily, learning how to deal with debt, money, and planning for that future doesn’t need to be hard. To that end, we’ve developed a simple to follow guide to help you find the tools you need to move to a better financial future. Get started by downloading our free guide right now.
A look into the world of debt relief seekers
We looked at a sample of data from Freedom Debt Relief of people seeking the best debt relief company for them during May 2025. This data highlights the wide range of individuals turning to debt relief.
FICO scores and enrolled debt
Curious about the credit scores of those in debt relief? In May 2025, the average FICO score for people enrolling in a debt settlement program was 593, with an average enrolled debt of $26,333. For different age groups, the FICO scores varied. For instance, those aged 51-65 had an average FICO score of 589 and an enrolled debt of $28,538. The 18-25 age group had an average FICO score of 548 and an enrolled debt of $15,062. No matter your age or debt level, it's reassuring to know you're not alone. Taking the step to seek help can lead you towards a brighter financial future.
Collection accounts balances – average debt by selected states.
Collection debt is one example of consumers struggling to pay their bills. According to 2023, data from the Urban Institute, 26% of people had a debt in collection.
In May 2025, 30% of debt relief seekers had a collection balance. The average amount of open collection account debt was $3,203.
Here is a quick look at the top five states by average collection debt balance.
State | % with collection balance | Avg. collection balance |
---|---|---|
District of Columbia | 23 | $4,899 |
Montana | 24 | $4,481 |
Kansas | 32 | $4,468 |
Nevada | 32 | $4,328 |
Idaho | 27 | $4,305 |
The statistics are based on all debt relief seekers with a collection account balance over $0.
If you’re facing similar challenges, remember you’re not alone. Seeking help is a good first step to managing your debt.
Support for a Brighter Future
No matter your age, FICO score, or debt level, seeking debt relief can provide the support you need. Take control of your financial future by taking the first step today.
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Author Information

Written by
John Russo
John Russo is a Creative Manager at Freedom Debt Relief. His goal is to make the world of personal finance more accessible so that everyday people can find the right financial solutions for themselves. In his free time, he enjoys hiking, reading pretty much anything, and spending time with his fiancée and two cats.