Key takeaways

• Brokerage accounts, emergency savings, and retirement accounts can help support mid- and long-term financial plans.
• High-interest debt can accumulate interest that can build up over time.
• 52% of people regret not starting an emergency fund sooner.

Refunds for the 2025 tax year are expected to rise up to 20% higher on average, thanks to new policy changes, and Americans collected an average refund of $3,167 last tax season.¹ If you think you’ll get a tax refund this year, options abound for the money — from treating yourself to paying yourself forward.

Here are five ways to consider using your tax refund to help meet bigger money goals.

1. Invest in a brokerage account

Taxable brokerage accounts offer a way to invest money for mid-term and long-term financial goals like a dream vacation, new car, or future home improvements.

Although you need a financial institution to open the account, you are in full control of how much money you transfer and withdraw. To start investing, you’ll deposit money into the account by transferring funds from an existing account such as a checking or savings bank account or another taxable brokerage account.

These accounts allow people to buy a variety of investments, including individual stocks, ETFs, and bonds. Gold and cryptocurrencies have seen waves of popularity in recent years, and investors hesitant to own either outright can gain exposure to those holdings via mutual funds and ETFs within a brokerage account.

Read more: What is the average asset allocation by age?

Remember that down the line, you’ll pay capital gains taxes on any profits you earn upon selling a security within these accounts. You can lower the impact of these taxes on your finances by monitoring how long you own shares; capital gains are categorized as either short or long term, and the amount of taxes you pay can vary widely.

Keep in mind that a brokerage account is intended for knowledgeable investors who understand the risks associated with the account.

2. Pay off high-interest debt

A tax refund can serve as an influx of cash to pay down debt, and credit cards often carry high interest rates. In November 2025, the average interest rate for credit card accounts charging interest was 22.3%, according to the Federal Reserve.² With interest compounding and adding to your overall debt load each month, it can be difficult to make credit card payments and still allocate money for retirement or an emergency fund.

Consider using your tax refund to make a dent in high-interest debt. If your refund isn’t enough to take care of your balance in full, consider using it as a way to kickstart a debt-payoff plan.

3. Contribute to an emergency fund

Financial professionals recommend creating an emergency fund that can cover about three to six months of expenses. An emergency fund can help protect you from financial hardship in the face of unexpected expenses, like a large medical bill or job loss. However, Empower research shows that Americans hold only a median of $500 for emergencies.

One tax refund may not be enough to fully fund an emergency savings account, but it can be used as a jumping-off point. Even just a few hundred dollars can provide some peace of mind if financial hiccups, like car repairs or a temporary reduction in work hours, arise. Preparation is key: Over half of people (52%) regret not starting an emergency fund sooner.

4. Save for retirement

Putting a tax refund in a retirement savings account like an IRA or 401(k) can pay off in the long run as savings may benefit from potential market growth over time. In addition, any investment returns you earn can produce earnings of their own — a phenomenon known as compounding that can have a major impact on your long-term savings.

• In 2026, you can put up to $7,500 in an IRA (plus an additional $1,100 if you're 50 or older). There are wage restrictions on who can contribute to an IRA.

And while people can’t deposit a tax refund directly into a 401(k), you can use the cash to pay for day-to-day expenses and bump up the percentage you contribute to your 401(k).

• In 2026, you can defer a total of $24,500 in a 401(k) plan on your own (not counting any employer-matching dollars). If you’re age 50 or older, you can put away up to an additional $8,000 in catch-up contributions. For those 60-63, that catch-up contribution limit rises to $11,250.

Read more: Can I contribute to a 401(k) and an IRA?

5. Treat yourself

There's nothing wrong with setting aside some of your tax refund to reward yourself, too. Empower studies have found that 51% of Americans believe that money can buy happiness, and 44% think that memories made while traveling are priceless.

Fueling financial growth

Getting a tax refund can feel like a sudden windfall, though keep in mind that those funds act essentially as an interest-free loan to the government. Adjusting withholding amounts via a W-4 form could get you more money in your pocket each pay period throughout the year rather than as a lump sum when filing your taxes.