About 60% of middle-income families expect a tax refund this year, according to a new survey. But how will they spend that windfall?
Recently, financial services firm Primerica asked middle-income families in the U.S. about their finances. During the process, Primerica learned how the nearly 1,500 adults surveyed expect to spend their tax refund.
For the purpose of the survey, the firm defined middle-income households as those with annual household incomes of $30,000 to $100,000.
Following are this group’s most common answers regarding their intended uses for their federal income tax refunds.
Many expect smaller refunds
In the survey, the largest share of respondents — 36% — said they expect smaller refunds this year than they have received in the past.
That should not be a big surprise. Even the IRS has warned that refunds are likely to shrink a bit this year.
Some factors that are reducing refunds include the fact that pandemic tax breaks are now over, and fewer people are qualifying for the earned income tax credit.
Additionally, 33% of respondents in the survey expect a refund similar to what they got last year, and 24% anticipate a larger refund this year than in 2022.
1. Pay bills
Survey respondents who said they plan to do this with their tax refund: 37%
Rising prices have left Americans struggling just to make ends meet. So, instead of spending a tax refund on an exotic vacation or some other fun splurge, more people are resigned to simply using the money to pay the bills.
If you need help staying afloat as prices rise, check out the “10 Sure-Fire Ways to Beat Inflation.”
2. Pay down debt
Survey respondents who said they plan to do this with their tax refund: 34%
With a possible recession looming, paying down debt is a smart way to prepare for what could be a gathering storm.
For more on how to get out of the red, check out “5 Things You Need to Know About Paying Off Debt This Year.”
3. Add to savings
Survey respondents who said they plan to do this with their tax refund: 33%
It is heartening that despite today’s tough economic climate, one-third of survey respondents still feel their balance sheet is strong enough that they can afford to put more money into savings.