Here’s the Average Tax Refund This Year Now That the Filing Deadline Has Passed

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Wondering how your tax refund stacks up this year? Read on to find out. 

At the start of the 2023 tax season, filers were warned to gear up for lower refunds than what they got in 2022. The logic was that since the pandemic-era tax benefits that applied to 2021 went away in 2022, refunds would be lower.

Meanwhile, data shows that those predictions were pretty spot-on. As of the week ending April 21, the average IRS refund issued was $2,753, marking a decline of 8.6% from the same time the previous year.

The IRS is still in the process of going through tax returns and issuing refunds. So it’s too soon to get a pulse on what the average tax refund for all of 2023 is. But no matter what your refund amounts to, it’s important to make the most of that money. Here’s how.

1. Build or boost your emergency fund

A big reason the aforementioned pandemic-era tax benefits didn’t apply in 2022 was that the economy had improved quite a lot by the start of last year. And right now, the same holds true — the economy seems to be in a good place.

But things could change later this year, and experts are still warning about a potential recession. So it’s a good idea to do what you can to boost your savings account in case you wind up losing your job in the midst of an economic decline.

At a minimum, you should aim for an emergency fund with enough money to cover three months of essential expenses. And if you can aim even higher so you have enough cash to cover six to 12 months of bills, even better. Your tax refund could get you closer to whatever emergency fund goal you decide to set for yourself.

2. Get rid of high-interest debt

Owe money on credit cards? Now’s a good time to whittle down those balances. If a recession hits, the last thing you’ll want are costly debt payments hanging over your head.

Plus, credit card debt can be costly due to the high interest rates that tend to apply. So even if you’re not particularly worried about losing your job, it’s still a good idea to use your refund to knock out high-interest debt.

3. Invest for your future

Maybe you’re good on emergency savings and don’t have high-interest debt to contend with. If that’s the case, you have a prime opportunity to use your tax refund to better your future.

Consider putting your tax refund into an IRA account and investing it for retirement. Or if you want to invest with more flexibility, put that money into a regular brokerage account and load up on stocks and other assets that have the potential to grow your refund into a larger sum over time.

4. Invest in your career

Being great at your job won’t necessarily spare you from getting laid off if a recession hits. But the more value you bring to the table, the lesser your chances of being let go. So if you’re sitting on a nice tax refund, consider using it to further your career.

You can spend that money to go back to school, take a course that teaches you new skills, or attend professional conferences your employer won’t pay for. You can also consider using that money for new equipment if you run your own business or are self-employed.

Just because tax refunds are down this year compared to 2022 doesn’t mean you’re not sitting on a nice IRS payday right now. And the more savvy you are with that money, the better it’s apt to serve you.

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