Many consumers expecting a tax refund this year will use it to pay down debt or save the money, according to the National Retail Federation’s annual Tax Returns Survey.
Nearly 35% of consumers expecting a refund report they plan to pay off debt, compared to 39.1% in 2015. The percentage planning to use their refund to pay for every day expenses also declined from 25.1% in 2015 to 22.4% this year, according to the survey.
An estimated 49% of consumers expecting a refund plan to save the money rather than spend it, the highest percentage in the survey’s history. The survey, conducted by Prosper Insights and Analytics, revealed that while 11.4% (down from 13% last year) said they will splurge on a vacation, 9.2% (compared to 10.5% last year) plan to spend on a large purchase such as a television or car. Nearly two-thirds of the consumers responding to the survey said they expect a refund.Among young adults, 57.3% of those ages 18-24 plan to save their refunds while 27.4% will use the cash for groceries, gas and other everyday purchases, according to the survey. More than half (52.3%) of those ages 25-34 plan to tuck their refunds into savings and 45% will use it to pay down debt.
"Americans this year see refund season as a time to improve their financial health by using their refunds to get ahead on savings goals and plan for bigger purchases in the future," said NRF President and CEO Matthew Shay in a National Retail Federation news release.