If you’re anticipating a tax refund from the IRS in 2026, what are you planning to do with it?
While earnings, deductions and credits will vary across taxpayers, last year’s average refund was $3,167. Consider these 14 ways to put that potential surplus toward your goals.
Use your tax refund to increase your savings and pay down debt
If you’re looking to strengthen your finances, consider putting your tax refund toward reducing debt and building new savings. You might use your refund to:
1. Add to your retirement account
Stashing your tax refund in a retirement account gives it plenty of time to grow over the years. If you don’t already have a traditional or Roth IRA (Individual Retirement Account), this could be a great time to start one.
2. Bolster your emergency fund
Ideally, your emergency fund should hold three to six months of expenses. Your tax refund can add a nice cushion to a rainy-day account.
3. Build a CD ladder
Laddering CDs (Certificates of Deposit) could help you take advantage of higher pay out generally offered by long-term CDs, but without entirely locking up your funds since the different CDs you open will have staggered term lengths. Ally Bank offers a range of CDs that can deliver returns over several years at a time. As with any financial decision, evaluate the rates and stipulations of each account type to decide what's best for you.
4. Pay down credit card debt
When you have the chance to knock out some debt, especially high-interest credit card debt, take advantage of the opportunity.
Read more: Help make your money work harder for you with an Ally Bank account
Major purchase on the horizon? Use your refund to get there faster
If you’ve been saving up for something special, your tax refund can help you reach your goal more quickly. You could use your refund to:
5. Make a down payment on a car
Using your tax refund to supplement your down payment could be a smart way to fund a new ride, because a larger down payment can help reduce the finance charges you’ll pay over the life of your car loan.
6. Take a vacation
Whether you’re in the mood to visit somewhere tropical, historical or cultural, you could use the extra cash on a getaway. Or store it in a savings bucket in an Ally Bank Savings Account, so it can grow until you’re ready to hit the road.
If you’ve been saving up for something special, your tax refund can help you reach your goal faster.
7. Make a special purchase
If you’ve had your eye on a big purchase that’s out of your typical budget, this could be the boost you need to help you get it
Use your tax refund to give back to your family or community
Would you like to help someone other than yourself? Here are ways to use your tax refund to give back:
8. Donate to your favorite cause
Giving a portion of your tax refund to a charity can be a meaningful way to make the most of your money.
9. Adopt a pet
It’s no secret pets can be expensive. If you’ve been saving up to expand your family with a furry friend, you might consider using your tax refund to cover its adoption fees or initial vet costs.
10. Send your kids to summer camp
A week away at camp can be an unforgettable experience — but it typically isn’t cheap. If you’ve got kids in need of play, you could put your tax refund toward some fun.
Refresh your routine and use your tax refund for new experiences
Try these ways to treat yourself with your tax refund, while still being mindful of your money:
11. Learn something new
Expand your horizons and put your tax refund toward learning a new skill, such as taking a cooking class or AI workshop.
12. Revamp your fitness journey
Consider setting aside your tax refund to cover gym costs or class fees. If the habit sticks, you can use spending buckets in an Ally Bank Spending Account to better track regular costs.
13. Redecorate a room
Use your refund to refresh the place you spend your time — buy a new coffee table, reupholster your dining room chairs or add a fresh coat of paint.
14. Do something new
What have you always wanted to do? Hike the Appalachian Trail? Get front-row tickets to your favorite band? Add your refund to a savings bucket in your Ally Bank Savings Account to start building that adventure fund.
Put your refund toward what matters
A windfall in your savings account may seem exciting, but without a plan you risk spending it on something fleeting rather than putting it towards something meaningful. Take some time to think about your goals and how your refund can help you get there.
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