To help you navigate what could be shaping up as historic tax season, we sat down with Derik Farrar, head of Everyday Banking and Borrowing at U.S. Bank, to discuss what’s driving these changes, what they mean for your wallet and practical strategies to make the most of your refund or other extra cash windfalls this season.

What can we expect the average tax refund amount to be this year?
Last year, the average tax refund was $3,151, which was slightly higher than the 2024 average. This year, many leaders and organizations expect tax refunds to be even larger, including the House Ways & Means Committee, which anticipates refunds to be $1,000 more this year compared to last tax season. 

Why are many refunds predicted to be larger?
A tax refund occurs when you overpay on your tax liability throughout the year, typically through elected paycheck withholdings. Many taxpayers did not make mid-year adjustments to their withholdings to account for retroactive tax laws enacted last calendar year, primarily under the One Big Beautiful Bill Act. As a result, the administration is projecting that taxpayers may have overpaid by a larger amount and in turn could receive a bigger refund.

Why does this matter for your financial goals?
Before you spend this money, take time to consider how it can work harder for you. Now may be a good time to rethink your financial priorities and take stock of your accounts. Instead of letting these funds simply evaporate into your everyday spending, think about how it can help you reach your goals this year. 

Whether you’re building an emergency fund, paying down debt or saving for something big, a little extra planning can turn a windfall of any size into the beginning of long-term financial stability. Even small steps like setting aside part of your tax refund for savings can make a measurable difference over time.

Looking ahead, what’s the best way to put this extra cash to work?
Start by taking a look at your personal priorities and talk with a banker about the various products available for putting your money to work. For instance, a competitive rate savings account like U.S. Bank Smartly Savings® can allow you to earn interest on your money while keeping the funds liquid and accessible. If you’re looking for higher returns, certificates of deposit (CDs) provide guaranteed rates over a set term if you don’t plan to need access to those funds during the defined term, while Elite Money Market Accounts (EMMAs) can offer competitive yields and access to the funds when you need them. These can be helpful tools to consider as part of your overall plan.

If you have a major purchase coming up – but also want to beef up your savings – a 0% APR credit card can help you spread out purchase costs over time while allowing your tax return to grow in a competitive rate savings product. The U.S. Bank Shield™ Visa® credit card currently offers a 0% intro APR on purchases for 24 billing cycles. (After that, the APR is variable, currently 16.99% - 27.99%).

When it comes to how you use cash windfalls, many people begin by working to have an emergency fund that covers three to six months of expenses. This safety net can provide peace of mind during unexpected situations. Paying down high-interest debt can be another smart move to consider to reduce financial stress and save money on high interest debt over time. Beyond that, it can be worth considering allocating the funds for long-term goals like retirement or education savings, or short-term goals such as setting aside money for a major purchase.

Why is now the right time to plan for how to use your refund?
While refunds for many taxpayers won’t arrive for a few weeks or months, the beginning of the year is an ideal time to set financial goals and create a plan for how you’ll use extra funds. Budgets are resetting, priorities are shifting and it’s a natural opportunity to refresh your goals and consider how these cash windfalls can help you achieve them. 

The Federal Reserve has made two recent interest rate cuts, and we could continue to see a declining rate environment in 2026. So if you don’t need immediate access to your tax refund, now is a great time to make a plan to put those funds in a fixed-rate savings product for a longer term for a guaranteed return on your tax return. This can help your money work harder during this changing rate environment. 

U.S. Bank continues to make planning ahead simple with our pre-commitment tool that lets you set aside part of your refund automatically when it arrives. Explore this and other helpful tax season resources at our Tax Resource Center.

Ready to make your refund work harder? Talk to a U.S. Bank banker today to explore savings options that fit your goals — whether you want flexibility, guaranteed returns or personalized rates. Extra income is a great opportunity to build peace of mind for the future, and U.S. Bank is here to help you make it happen.

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