New tax law driving higher refunds—and smart ways to use yours

Tax refunds are trending higher this year, with the average check near $3,700, and many households plan to use this windfall to shore up essentials like debt repayment, savings and home repairs. In a still-elevated rate environment, directing refunds toward high‑interest balances can provide a meaningful boost to household balance sheets while freeing future cash flow for long‑term goals.

Building or replenishing emergency funds remains critical as many Americans still struggle to cover even modest unexpected expenses, underscoring the value of accessible cash reserves. For longer‑term planning, refund dollars can be a convenient way to fund Roth IRAs, HSAs, 529 plans or workplace retirement accounts and enhance tax efficiency over time.

Advisors have an opportunity now to help clients prioritize among these choices and revisit withholding so that future tax outcomes align more closely with their broader financial plans.