As tax refunds arrive, almost half of Americans say they will use some or all of their windfall to boost savings, a National Retail Federation study finds. About a third say they’ll use their refund to pay down debt.
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In its annual survey, the National Retail Federation found that almost half of U.S. consumers who anticipate a refund this tax season aim to put all or some of the funds into savings (49 percent), a high-water mark since the survey began in 2007. Meanwhile, 35 percent say they’ll apply their refund to pay down outstanding debt.
In contrast, only 22 percent plan to use any of their refund for everyday expenses, and 12 percent for a vacation. Smaller shares indicated all or some of their refund would go toward a splurge (10 percent), a home improvement (9 percent) or a major purchase (8 percent).
Over the dozen years that NRF has conducted its survey, savings and paying down debt have consistently been prioritized as the top two uses for tax refunds. However, in the years surrounding the Great Recession, reducing debt was the No. 1 choice, peaking at 48 percent in 2009.
Two years later, the priority to save had moved up while paying off debt ticked downward, until the two stood neck-and-neck in 2011. Since then, a move to boost savings has continued to grow most years, while the share paying off debt has modestly declined and plateaued around 35 percent for the last three years.
The National Retail Federation has conducted its Tax Returns Survey every February for the past 12 years. This year’s installment drew on responses from over 7,600 expected tax filers, with results released Feb. 28.