Expecting a tax refund? Here’s how to make the most of it

More than 100 million Americans will receive a tax refund this year

More than half of American adults could not cover an emergency expense of $1,000 or more, according to Bankrate’s 2025 Emergency Savings Report. Tax refund season is an opportunity to set aside savings to reduce the stress – and potentially costly debt – that comes when an emergency need arises.

We recently sat down with Derik Farrar, head of personal deposits at U.S. Bank, to discuss how the bank is helping clients be proactive about saving during tax and bonus season.

What can we expect the average tax refund amount to be this year?

Last year, the average tax refund was $3,138, which was slightly lower than the 2023 average. The average tax refund is generally dictated by adjustments to standard deductions and tax brackets if your income remains the same year over year. This year, some taxpayers may see a larger refund than the year prior due to continued inflation-related adjustments – if other factors such as income, withholding and filing status and tax credits stay the same.

If you are expecting one, what should you do with a tax refund or bonus?

A tax refund or bonus provides one of the best opportunities each year to save – whether you are just starting a savings account or building up your emergency fund. If you don’t need your refund for immediate everyday living expenses or to pay down high-interest debt, consider allocating as much of your tax refund or bonus as possible to savings. Making a plan and commitment now to save those funds can help you stay on track and grow your savings account. 

How is U.S. Bank helping clients be proactive about saving during tax and bonus season?

In December, we began providing clients with a new digital tool to pre-commit a set amount or percentage of their anticipated tax refund or bonus to savings. When their refund or bonus is identified, they’ll be alerted to log on and complete the transfer to their savings account.

In fact, behavioral science findings show that the act of pre-committing has a positive impact on savings outcomes. A study by Science Direct found that early tax fillers who pre-committed a portion of their refund to savings saved 25% more than those who didn’t pre-commit.

What products are available to help savers earn more on their savings totals?

U.S. Bank Smartly® Savings is a new competitive rate savings account that can help new savers get started, while also rewarding more experienced savers. With Smartly Savings, account holders can earn competitive rates[1] on their savings balances based on their total combined qualifying balances with bank and when paired with a Bank Smartly® Checking or Safe Debit Account,  U.S. Bank Smartly™ Visa Signature® Card. Based on your financial goals, a CD or money market account can also provide earning opportunities.

Why is it important to prioritize savings in 2025?

According to the Bankrate 2025 Emergency Savings Report, more than 50% of adults could not cover an emergency expense of $1,000 or more. Earlier report findings showed that 27% of adults have no emergency savings at all.

Having savings set aside can reduce stress when a financial emergency arises and help avoid taking on costly debt that can plague your finances long-term.

If you are looking to introduce healthier financial habits, consider making saving your tax refund or annual bonus a new ritual.

Editor’s Note: The content of this article is accurate as of publication on February 19, 2025 and may have changed. For the latest product information, refer to the U.S. Bank Smartly® Savings product page.

[1] The interest rates and APYs for the U.S. Bank Smartly® Savings account are variable, determined at the bank’s discretion, and can change at any time, including after the account is opened.