Understanding Tax Refunds in 2024: Trends and Insights
Recent data from the IRS highlighted by Bankrate indicates that a significant majority of American taxpayers—64%—received a tax refund in 2024. But how much did those refunds average, and how are taxpayers planning to use this influx of cash?
Average Refunds Across the U.S.
For the tax year 2022, the average refund was reported to be $4,381 according to a detailed analysis by LendingTree. However, this figure is not uniform across the country; it varies widely by state.
Top States for Tax Refunds
- Wyoming: The state with the highest average refund of $6,367.
- Florida: Received an average of $5,934.
- District of Columbia: Averaged refunds of $5,848.
Lowest Average Refunds
In contrast, some states report significantly lower refunds:
- West Virginia: Average of $3,183.
- Maine: Average of $3,199.
- New Mexico: Average of $3,394.
How Taxpayers Plan to Use Their Refunds
A significant majority (66%) of Americans have practical plans for their refunds. The breakdown of intended uses is as follows:
- Debt Repayment: 34% plan to use their refunds to pay off debts.
- Savings: 32% intend to deposit their refunds into general savings accounts.
- Uncertainty: 16% are unsure about how they will spend their refunds.
- Vacations: 14% aim to use their refunds for travel.
- Large Purchases: Another 14% plan to save for significant expenses like buying a home or car.
- Supporting Family: 11% have earmarked their refunds to assist family members.
In addition, a smaller portion of taxpayers have plans for retirement savings (10%) or investing in the stock market (9%).
Expert Advice on Tax Refund Utilization
Matt Schulz, chief consumer finance analyst at LendingTree, advises caution when allocating tax refunds. He noted, “There’s nothing wrong with taking a piece of the return and having some fun with it, but if you have high-interest debt and you’re working toward big long-term financial goals, the vast majority of the refund should go toward those things.”
This highlights the importance of thoughtful planning in maximizing the benefits from tax refunds, ensuring that financial stability is prioritized.