Tax preparation season is in full swing, and we’re now one month closer to the April 18th tax filing deadline. What do Americans expect out of the process this year? Has anything changed since last year? Here’s the latest tax season insights and data from CivicScience’s Tax Season Teaser report:
1. Expectations to owe continue to increase year-over-year.
While a majority of U.S. adults (57%) expect to receive a tax refund this year, that figure has been on a gradual decline since 2021. In contrast, the percentage of Americans who anticipate owing on their taxes has risen by four percentage points over the same time period, reaching 43% as of February 2023.
2. Paying off debt emerges as the top planned usage for tax refunds in 2023.
Americans who expect a refund from their taxes this year are thinking strategically on how they plan to utilize that refund. Among those who anticipate receiving a tax refund this year, 29% percent say they’re planning on using it to pay off debt, an increase of six percentage points from last year’s tax season.
The other most common use for tax refunds so far in 2023? Setting the money aside for future use, something which has remained among the top two uses throughout the past few years. The data also show spending it on home improvements, vacations, and shopping all rest at under 10%, and two of the three are down from last year.
3. Americans place the most trust in local government to spend their tax dollars wisely.
The level of trust people have in the federal government to spend their tax dollars wisely varies significantly among different ends of the political spectrum. Nearly half of those who lean liberal (46%) somewhat or strongly trust the federal government to spend tax revenue wisely, compared to 36% among moderates and just 16% of conservatives.
State governments show an improvement of trust among moderates and conservatives, but the partisan lines blur the most, however, at the local government level. Liberals and moderates still feel a higher level of trust (49% and 48%, respectively) than conservatives (36%), but the gap between them is nearly half of the one at the federal level.
Additional CivicScience tax insights:
1. Online tax services (such as TurboTax) are tied with personal accountants for the leading method Americans report they normally use to prepare their taxes, each garnering 23% of Americans, respectively. Having a friend or an outside family member prepare them is the least popular method at 5%.
2. Consumers ‘very concerned’ about inflation are more than twice as likely as those who are ‘not at all concerned’ to say their tax refund this year is ‘extremely important’ to their financial health.
Discover more in-depth insights in the full 2023 Tax Season Report. Clients receive this report in full and it can be purchased individually. Download a free preview of the report here.