Where are Americans already spending their higher tax refunds?

According to a new study, tax refunds are continuing to increase year-on-year — but half said they’ve had to spend it all on necessities just to get by.

The poll of 2,000 U.S. taxpayers who have received their tax refund this year found the average person got $2,825 back; a healthy increase from $2,300 from last year.

Nearly four in 10 (39%) confirmed this, stating they received more on their 2025 refund than they did last year. And in a year-on-year analysis, 32% said they received more on their 2024 refund than they did on their 2023 refund.

Commissioned by TaxSlayer (https://www.taxslayer.com/blog/americans-spend-tax-refunds-on-essentials/) and conducted by Talker Research, the annual study revealed 71% have already spent their refund or have made plans on what they will spend it on — another increase from 64% who said the same last year.

And like last year, nearly all who have already spent their refunds (98%) have done so on necessities. In fact, 49% have exclusively spent their refund money on necessities. Those include paying monthly bills (59%), groceries and essential goods (54%) and credit card debt (26%).

Only 18% have spent their refunds on luxuries, such as new clothes (43%), entertainment (28%) and fine dining (25%).

Satisfaction in refunds has also seen a rise: 63% said they were happily surprised with their tax refund this year, up from 62% last year and 40% in 2024.

Those who received more this year than last credited their big return with working more (35%), adjustments to their deductions and withholdings (32%) and pay raises (20%).

Meanwhile, 23% said they ended up earning less on their refund than last year, due to losing work (36%), moving to a higher tax bracket (14%) or dependents aging out of eligibility (13%).

“Refunds may be growing, but what stands out is how thoughtfully people are putting that money to work,” said Seth Babb, Head of Consumer Product at TaxSlayer. “For many households, refunds help cover essentials, which is why we focus on helping taxpayers maximize every dollar and make an impact that lasts beyond tax season.”

The study also revealed how recent tax law changes are having big impacts on taxpayers.

Two-thirds (65%) of Americans said they were aware of tax law changes being applied this year. And 83% have been impacted to some degree, with 29% facing “major or significant” impacts after filing their taxes for this year.

More than half (58%) believe at least one component of the One Big Beautiful Bill Act (OBBB) impacted their refund amount, from overtime income deduction (16%) to senior deduction (14%), increased child tax credit (12%) and tip income deduction (7%).

Forty-three percent believe the OBBB increased their tax refund amount and 34% believe it has also increased how much they pay in taxes. Others believe it has decreased the amount they received (17%) and the amount they pay (14%).

Two in five taxpayers (42%) said they weren’t sure how long their taxes would continue to be affected by the OBBB, but those who had an idea estimated it would last four years.

“Staying informed about tax law changes can make a real difference at filing time. Even small adjustments to credits, deductions, or income can add up,” continued Babb. “Our goal is to help customers understand those changes so they can make informed decisions and file with confidence, knowing they’ve done it right.”