Consumers Plan To Save — Not Spend — Their Income Tax Refunds

Tax time, though beloved by no one, has in the past come with a small upside for retailers: Consumers love spending those refund checks.

Or at least they once did. Today, it seems that trend is ebbing away, according to the NRF. This year, about half of those expecting a windfall from the Feds are planning to stow the money away instead of immediately spending it.

“Consumers are building their spending power and boosting their confidence as they set aside their checks from Uncle Sam,” NRF president and CEO Matthew Shay said in a press release. “Americans this year see refund season as a time to improve their financial health by using their refunds to get ahead on savings goals and plan for bigger purchases in the future. Money saved is money waiting to be spent.”

True enough, but the results aren’t exactly all that much more inspiring all the way down; 35 percent of consumers plan to use their refund to pay down some debt, while 11.4 percent are planning a vacation with the infusion of funds. Some still have plans to shop, though. A little over 9 percent of consumers are eyeing a new TV, while about 8.3 percent are planning a luxury experience like a spa appointment.

The most likely savers are young adults, who have 57.3 percent intent to save vs. the 27.4 percent who plan to spend the funds on gas, groceries and other everyday items. The slightly older young consumers (25 to 34, as opposed to 18 to 24) are nearly split between saving (52.3 percent) and paying down debts (44.7 percent).

“Millennials are being wise and putting saving ahead of splurging as they look for ways to get ahead,” said Pam Goodfellow, director of Prosper Consumer Insights, the firm that conducted the research for NRF. “Young consumers see their refund as an opportunity to build their savings without making a dent in their monthly budget.”