As of March 27th, the average tax refund issued was $3,521, up 11% from the same time in 2025 (source: IRS.gov). That’s a sizable amount and being intentional now on how best to utilize can either put you on a more solid path financially or disappear quickly with little or nothing to show for it. Let’s explore some ways to put your refund to work.
#1 - An Emergency Fund
You know the feeling when you turn your car on and the “check engine” light comes on? Usually, the first two thoughts that come to mind are, ‘well this can’t be good’ and ‘how much is this going to cost me?’ It is for times like this that I stress the importance of having an emergency fund set aside to pay for the inevitable “unplanned expense.” If your emergency savings are running low or you don’t have any currently, consider using a portion of your refund toward this goal. Aim to initially save 1 months’ worth of your take home pay at a minimum and keep it in an account that is easily accessible, like a savings account. Ultimately, aiming to have 3-6 months of expenses covered by your emergency fund is ideal, but starting with saving just 1 month of your take home pay now can make a huge difference.
#2 - Pay Down Consumer Debts
June is the start of wedding season. Maybe you’ve been invited to one or two, each of which requires you to travel to the venue, pay for hotels, buy a new outfit, and bring a wedding gift. Before you know it, your credit card bill has ballooned and you haven’t paid it off. Now you have interest accruing on the outstanding balance. Considering the average interest rate charged on credit card balances as of the end of April 2026 was 19.57% (source: Bankrate.com) these balances can quickly spiral upward if you aren’t able to pay them down or off in short order.
Using a portion of your tax refund to pay down or pay off your credit card debt as soon as you feasibly can will not only allow you the opportunity down the road to invest towards other goals, but will also hopefully alleviate some of the financial stress/mental burden that often comes with having this type of debt.
#3 – Invest In Yourself
After you’ve padded your emergency fund and paid down (or paid off completely) any credit card debt, consider using a portion of your tax refund towards other goals (both short term and long term). Short term goals could be saving for a home maintenance project you know if coming due, a new car, or a dream vacation as examples. Longer term goals could be saving for your child’s college education, your retirement, or a second home/vacation property.
Also, don’t discount using part of your refund for an investment in yourself. Maybe you’ve wanted to take a class or learn a new skill to further your career or start a business. Consider using your refund for something like this as well.
#4 - Lastly, Do Something Fun AND Meaningful
If your refund amount is relatively nominal in size or you’ve already been working hard on building up your emergency savings and paying down debt, consider using a portion of your tax refund to do something fun with friends and family. Creating a meaningful experience is something you will likely remember years down the road as opposed to hastily buying something now and forgetting about it in a month.
Remember that a tax refund is not a gift from the government. It is simply a return to you of your own money that you over deposited throughout the year through tax withholding or estimated payments. If your refund is consistently large, it would be a good idea to evaluate how much you are withholding versus how much you are likely to owe and make adjustments accordingly.
Securities and Advisory Services offered through LPL Financial, member FINRA/SIPC, a Registered Investment Advisor. LPL Financial and Croxall Capital Planning do not provide tax or legal advice. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.