A record low number of Americans will spend their tax returns this year while the second-highest number on record will put the money into savings, according to the annual tax return survey released by the National Retail Federation (NRF) and Prosper Insights & Analytics.
“Financial security continues to be top-of-mind for all Americans, and consumers are hanging on to their tax refunds tighter than ever,” said Matthew Shay, NRF president and CEO. “Consumers are leveraging their tax returns to build up their savings, but that’s good news in the long run because money saved today is money that can be spent down the road, particularly during the back-to-school and holiday seasons later this year.”
Of the 66% who are expecting a refund this season, only 20.9% of consumers will spend their refunds on everyday expenses, 8.7% will use them for major purchases such as a television, furniture, or a car, and 7.6% will splurge on special treats like dining out, apparel, or spa visits. The numbers are down from 22.4%, 9.2% and 8.3% last year, respectively, and are record lows in the history of the survey. The number planning to spend the money on vacations dropped to 10.7% from 11.4% last year, the lowest since 10.3% in 2013. In addition, 8.8% plan to use their refund on home improvements.
Rather than spending their refunds, 48% of consumers plan to put the money into savings, second only to last year’s record high 49.2%. In addition, 35.5% will use the money to pay down debt, up from 34.9% last year, but below the peak of 48% seen in 2009.
“Millennials are mindful of how they spend their hard-earned money these days, especially when it comes to any refund they expect from their taxes,” said Pam Goodfellow, director of consumer insights, Prosper. “Although Millennials and Gen X are focused on allocating their refunds to savings or reducing their debt, young adults are also apt to seize the opportunity to treat themselves to a little discretionary spending.”