This year's average tax refund and suggestions for how to use it.

As of March 8, 2024, the IRS had received approximately 62.8 million tax returns and refunded $135.3 billion to U.S. taxpayers.

Although the total refund amount is 7.4% less than it was in 2023, the average individual refund is already higher than it was in the previous year.

How much is the average refund?

In 2024, the average federal income tax refund is $3,145, which is a 5.9% increase from the previous year.

The IRS raised both the standard deduction and tax brackets by about 7% to adjust for inflation. This change put some people into lower brackets and allowed taxpayers who weren't itemizing deductions to keep more of their taxable income.

In January 2024, a Qualtrics survey for Intuit Credit Karma revealed that over a quarter (27%) of taxpayers anticipating a refund believed it would be bigger than the one they received in 2023.

How to file your taxes

The tax filing deadline for most Americans is April 15, 2024. While you can hire a tax professional or do it yourself, the IRS's free e-filing platform, Direct File, is only available in 12 states and other no-cost online options have income and deduction limitations.

TaxAct's accuracy policy is exceptional: if the program makes a mistake or you don't receive the maximum refund, TaxAct will refund your software costs and cover any additional costs up to $100,000, including legal fees and audit costs.

TurboTax's user-friendly platform will guide you through the tax filing process, and if you need additional help, it offers a library of resources to answer your questions. You can also pay for live assistance or have a professional handle the filing process for you.

While many top tax prep programs offer a free version, their support and offerings are limited. Among the paid options, TaxSlayer Classic stands out as a budget-friendly choice that does not impose income or deduction limits.

When will I get my refund?

According to the IRS, if you filed an electronic return and enrolled in direct deposit, you should receive a refund within 21 days of filing, provided there are no issues with your return.

It may take at least four weeks for your refund to be processed if you submitted a print return or an amended return.

You can check your refund status using the IRS' Where's My Refund? tool by inputting your Social Security number, filing status, and the refund amount listed on your return. The site is updated overnight, so checking it once a day is sufficient.

What to do with your refund

High-interest debt can be freed by prioritizing paying down credit card balances with refunds.

You can earn an APY of over 5% on your refund deposit with the Lending Club High-Yield Saving Account, which has no monthly maintenance fee or minimum balance requirement beyond the initial $100 deposit.

A four-digit tax return could be a healthy start toward a down payment on a car. If you need help paying for the rest of the vehicle after making a down payment, MyAutoLoan is a loan aggregator that provides up to four bids from participating lenders with just one soft credit pull. It offers competitive rates and flexible terms, and some lending partners will work with borrowers with credit scores as low as 575.

You could put a dream vacation on the Capital One Venture X Rewards Credit Card, which earns 5X miles on flights and 10X miles on hotels and car rentals made through Capital One Travel, plus 2X miles on all other purchases.

The $395 annual fee of the card is partially offset by a 75,000-mile welcome bonus earned after spending $4,000 in the first 3 months, a $300 travel credit for Capital One Travel purchases, a 10,000-mile bonus on each anniversary, access to Capital One and partner airport lounges, and other perks.

Bottom line

In 2024, the average tax refund is larger than the previous year. If you're one of the many Americans receiving a refund, consider using it wisely by paying off debt, saving it in an interest-bearing account, or using it to help fund a significant purchase.

Submit your return promptly, even if you don't expect a refund, to avoid penalties and interest.

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