Average tax refund nears $3,800, IRS says

As gas prices soar, Americans who have filed their taxes are getting a smidge of relief.

The average federal tax refund reached nearly $3,800, an 8.8% jump over the same week last year, according to Internal Revenue Service data. The government has processed more than 36 million refunds so far this season, totalling over $136 billion.

Refunds were projected to be higher this year thanks to provisions in the One Big Beautiful Bill, which makes new tax breaks available to millions of Americans. Major changes include new deductions on overtime pay and tips, a vastly expanded deduction for state and local taxes, and a bigger standard deduction — $31,500 for a married couple.

The vast majority of Americans claim the standard deduction instead of itemizing deductions. But it’s worth revisiting whether you’d benefit more from itemizing, especially if you’re a homeowner.

Those who bought in recent years typically have higher mortgage rates — they’ve averaged around 6.69% in the last two years, according to Freddie Mac data. And you pay more in interest in the first years of a mortgage. All that can make the mortgage interest deduction extremely valuable. If you live in a high-tax state, combine that with the jumbo-sized SALT deduction, and those benefits together could easily add up to more than the standard deduction.

A few weeks into filing season, the IRS has received just over 32 million returns and issued nearly 13 million refunds, slightly behind last year’s pace on both fronts. Processing by the federal tax agency is also lagging compared to 2025.

The IRS issues most refunds within 21 calendar days of receiving your return — if you e-file. However, if you mail a paper tax return, the whole process can take a week (or more) longer. Once you’ve filed, you can check your refund status and see if it’s been deposited to your bank account using the IRS Where’s My Refund tool.

The IRS expects to process around 164 million individual tax returns for the tax year 2025 by the April 15 filing deadline.

Been meaning to put away some savings, but keep getting sabotaged by unexpected bills? A tax refund is the perfect seed money for an emergency savings fund.

Emergency savings, sometimes called rainy day funds, can help support your family during a job loss, which often involves not just the loss of income but also healthcare. Or it could front money for unexpected costs, such as car or home repairs.

How much should you have squirreled away in an emergency fund? Any cash is better than nothing, but experts encourage putting away savings equivalent to three to six months’ worth of expenses.

Read more: What is an emergency savings fund?

Dumping a sizable portion of your refund check into a savings account to keep it safe from impulse buys isn’t a bad idea. But it’s important to remember that not all savings accounts are created equal when it comes to interest rates.

You’ll get more bang for your buck by leaning into high-yield savings accounts, money market accounts, or a high-yield CD (certificate of deposit). While those high APYs are a big benefit, there are some drawbacks, such as restricted access to your funds and scheduled minimum deposits. Understanding how these accounts work is crucial.

And be sure to choose a bank that’s FDIC-insured. The Federal Deposit Insurance Corporation (FDIC) is a government agency that insures your bank deposits up to $250,000 per depositor in case of bank failure.

Read more: High-yield savings account vs. CD: Which is right for you?

One of the most effective ways to use your refund check is to pay down debt. Eliminating your credit card debt, paying down medical bills, and tackling any other debts with interest in double-digit territory is a solid investment in your financial future.

If you don’t have high-interest debt, you can make extra payments on student loans, a car loan, or even a home loan that you might not otherwise be able to afford.

Read more: The best ways to pay off credit card debt

Thanks to the magic of compound interest, putting your refund check into a retirement account is an investment strategy that pays serious dividends. Adding $3,138 (the average refund in 2024) to a typical IRA could turn your refund check into as much as $25,000 after 25 years.

However, before you decide to use all your extra money to pad your retirement savings, double-check the contribution limits for a traditional IRA, Roth IRA, and 401(k). If you’ve already contributed the maximum, you may want to add funds to your health savings account (HSA) instead.

Worried about protecting the gains of your retirement plan as you approach 65? Experts recommend pulling 5-10 years of living expenses into more accessible high-yield savings accounts when you reach retirement age and shifting some of your asset allocation into the relative safety of high-quality bonds. Reducing risk in your retirement portfolio can shield your immediate retirement income from potential volatility in the stock market.

Read more: These are the new traditional IRA and Roth IRA limits in 2026

Take time to carefully consider your personal finance goals and put your refund to work. Some possibilities include: