Bigger refunds are rolling in, but don’t blow them. Here’s what the IRS data means and how to put that extra cash to work for you.

The news is in! The IRS says tax refunds for the 2024 tax year are trending higher than last year. It might feel too early to think about your tax return, but getting a jump on the good news could give a boost to your financial fierceness.

So, How Much Are We Talking?

According to recent IRS data, the average tax refund right now checks in at around $3,207. That’s a small but welcome increase over the average during the same time period last year. But, before you start making a mental shopping list, let’s dig a bit deeper.

Why the Change?

There are a few reasons why we might be seeing an increase in early refund sizes:

• Pandemic Credits: The big tax credits during the pandemic are over. This means fewer deductions and write-offs, which sometimes results in a higher refund.
• Inflation Adjustments: 2023 tax brackets were adjusted for inflation, which could help keep more money in your pocket.
• Time of Year: The IRS tends to process simpler returns with refunds early in the filing season, potentially skewing the “average” higher at the moment.

Should I Expect a Similar Refund?

It’s important to remember that your tax situation (like income, filing status, dependents) is completely unique to you. Don’t compare your return to the current average – it’s just a snapshot in time.

What to Do With Your Refund

So, you got a welcome windfall. Instead of going on a spending spree, be strategic and focus on your financial goals:

• Pay Down High-Interest Debt: Credit card balances, lingering student loans, those suck money out of your budget. Putting your refund towards high-interest debt will save you tons in the long run.
• Boost Emergency Savings: Life happens – job loss, car repairs, medical expenses. An emergency fund acts as a safety net.
• Invest in the Future: Contribute to a retirement account (think Roth IRA for potential tax perks) or other investments to build long-term wealth.

Ready to take control of your financial fierceness? Let’s use this tax season to level up! Here are a few things you can do right now:

• Calculate Your Potential Refund: Use the IRS withholding estimator (https://www.irs.gov/individuals/tax-withholding-estimator) to see where you stand and adjust for next year if needed.
• Bookmark a Great Financial Resource: There’s lots of info out there. Websites like NerdWallet (https://www.nerdwallet.com/) offer free tools and calculators.
• Share with Your Fierce Friends: Which of your friends could use some money motivation? Share this article and start a conversation about building a strong financial foundation together!