Of the 65% of taxpayers surveyed who expect a tax refund, 49% said they will put it into savings.
Retailers will spend the next several months trying to disprove National Retail Federation research about how consumers plan to use tax refunds.
Consumer behaviors often differ materially from their stated intentions and U.S. retailers will be hoping that is the case this year following the release of new research from NRF. More Americans than ever plan to hold on to their tax refunds this year rather than spending the money they get from the IRS, according to the annual tax refund survey released by NRF and Prosper Insights & Analytics.
Of the 65% of taxpayers surveyed who expect a refund, 49% said they will put it into savings. That’s up slightly from 48% last year and the highest level in the 12 years NRF has surveyed about their tax refund spending intentions. In addition, 35% said they will pay down debt, in line with last year and the lowest level since 2016 and far below the peak of 48% seen during the recession in 2009.
Only 22% will spend this year’s refunds on everyday expenses, the second-lowest level in survey history after last year’s 21%. Beyond that, 12% said they will use their refund for a vacation; 10% will splurge on dining out, trips to a spa or apparel; 9% will make home improvements; and 8% will make major purchases ranging from a television or furniture to a car.
“Younger consumers are being more mindful about their hard-earned money, especially those 18-24 who have already filed their taxes this year, higher than any other age group,” Prosper Executive Vice President of Strategy Phil Rist said. “Although this group is focused on allocating a portion of their refunds to savings, they are also more likely to use them for everyday expenses compared with any other age group.”
The survey, which asked 7,657 consumers about their tax return plans, was conducted February 5-13 and at that time 59% had already filed their taxes or expected to do so by the end of February.