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Tax season is officially underway. While the new Trump administration won’t have any direct impact on this year’s filing, any policy changes or other efforts may factor into how Americans plan to utilize their refund. CivicScience has the latest data on early tax season filing including how Americans plan to file, what their refund expectations are, and how their spending plans have changed over the past year.
February could be a busy month for tax filing, while the majority of Americans plan to do their own taxes.
The IRS began processing e-filed returns on January 27 and has reported a noteworthy decline in the number of returns compared to the first week of last year. CivicScience polling of eligible taxpayers who have yet to file shows the majority (68%) plan to file by the end of March, including 38% filing by the end of February. Another 28% aim to file by the April 15 deadline and 4% anticipate filing an extension.
When it comes to how they’ll prepare them, the majority of tax filers will handle their own taxes. This includes 24% planning to utilize free software or online services and 23% using a paid service. On the other hand, more than a third will opt for an accountant to handle it for them.
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Nearly 7 in 10 of those who have or plan to use tax software will use either TurboTax or H&R Block.
New CivicScience data show it’s still a two-horse race when it comes to tax software – 37% of those planning to or already used tax software turned to TurboTax, while 30% percent lean toward H&R Block.
Why does it Matter? How Americans plan to spend their refunds shifts away from shopping sprees.
The latest data show 58% of consumers expect to receive a refund from their taxes this year, marking a one percentage point uptick from this time last year (excluding those unsure).
When it comes to how they’ll spend those refunds, paying off debt (28%) and setting it aside(25%) remain top priorities, with a two percentage point increase in those using their refund to pay off debt compared to last year. Notably, far fewer Americans plan to spend their refund on a shopping trip – now less than half as likely as in February 2024. Instead, slightly more people intend to put their refund toward home improvement or travel, each seeing a one-point increase.
Gen Z aged 18-24 is the most likely to invest or go shopping with their refunds, while those in the 55+ are most likely to set it aside. Those expecting a refund between the ages of 45 and 54 lead the way in putting their refund toward paying off debt.
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Early tax season data indicate it could be a busy season once again for TurboTax and H&R Block. But it’s not good news for everybody – despite the slight uptick in refund expectations, Americans may be taking more of a cautious approach with how they spend them, signaling a potential red flag for retailers in the months ahead.
