When Carl Matthew Moral, 23, prepared his parents’ returns through H&R Block, he estimated a refund of about $3,700. His father, Jimmy Moral, plans to use that money toward a new car for his son.
With Tax Day, April 15, less than two weeks away, many early filers are seeing larger refunds. The IRS reported the average refund for the week ending March 27, 2026, at $3,521 — roughly an 11% increase from the same point last year — though those numbers can shift as more returns are processed.
Economists link much of the rise to the Republican tax changes in the 2025 One Big Beautiful Bill Act. That law, which expanded the standard deduction, raised the child tax credit and added deductions for tips and overtime pay, is estimated to be responsible for about a $350 bump in refunds on average.
David Tinsley, senior economist at the Bank of America Institute, describes a “sugar-rush” effect among early filers. Bank of America’s consumer card data show those filers have increased spending in discretionary categories such as electronics, hotels, lodging and restaurants compared with a year earlier.
But many people are directing refunds toward necessities and improving their finances. Card and survey data indicate refunds are frequently used to pay down credit card debt, build savings and cover essentials like groceries and rent. A LendingTree survey found roughly two-thirds of filers said their refund was very or somewhat important to their financial situation, and a growing share reported relying on that money. As LendingTree’s chief consumer finance analyst Matt Schulz put it, people “aren’t just going out and blowing their tax refund on fun and existing stuff” — many are allocating funds to essentials.
Higher gasoline costs are absorbing part of the windfall for some households. Sarah Granderson, a recent Jacksonville State University graduate, invested her $400 refund in stocks but says it felt like the money went straight back to fill her car. Researchers at the Stanford Institute for Economic Policy Research estimated that, under certain assumptions, households could pay about $740 more for gas this year — a forecast that already included some temporary supply disruptions that have persisted.
Although refunds are higher year-over-year, the increase is smaller than Bank of America Institute analysts had expected; they had projected roughly a 25% rise. “It’s still net positive, but it’s probably not as positive as people were hoping for,” Tinsley said. Timing and the fact that many taxpayers have yet to file could affect averages, though IRS week-over-week comparisons try to account for that by matching the same point in last year’s season.
If you receive a larger refund and are wondering how to use it, personal finance experts offer straightforward priorities:
– Pay off highest-interest debt first. Mandi Woodruff, host of the Brown Ambition podcast, recommends tackling high-interest balances such as credit cards because they do the most damage to long-term finances.
– Build or top up an emergency fund to cover three to six months of expenses. Rich Guerrini, head of PNC Wealth Management, calls this a major priority.
– Consider investing some of the money, either in the market or in yourself. Guerrini notes that investing in education or training can pay off by boosting future earnings.
– Allow a modest portion for enjoyment. Woodruff advises it’s reasonable to use part of a refund for a treat while directing the rest toward debt repayment or savings — people still deserve occasional time off.
For many households, larger refunds provide a mix of relief and choice: extra spending power for discretionary items, an opportunity to strengthen financial footing, or a necessary cushion against rising costs such as fuel. How that money is used will depend on individual priorities and financial pressures.