How to Spend Your Income Tax Refund – 25 Ideas

Are you getting a big IRS income tax refund?

It’s always nice to get a nice chunk of change coming back to you, isn’t it?

But what will you be doing with your income tax refund?

I’m not always fond of looking forward to a large refund but they do happen and I know some people love getting them.  If you are getting a large income tax refund then at least put some thought into how you are going to use that money.

Having money in the bank is a great thing and when it’s a sizable amount you can really make some differences with your finances.

I came up with some ideas for a large income tax refund. 

I’ve broken it out into different sections to make it easier for you to find something of interest.  Make sure to read through to the end and add your suggestion in the comments!

25 Ideas for Your Income Tax Refund

25 things to do with your income tax refund.


1. Pay off credit cards

If you have credit card debt then a large tax refund can be your opportunity to put a dent in or end your credit card debt.  Pay it off and you save by not paying as much interest charges!

Think about it – if you are paying interest on your credit card debt  then you are eroding your potential for wealth.  Go attack that credit card debt!

2. Pre-pay mortgage

You can take that refund and pre-pay your home mortgage.  You may be able to do an extra month or better.  Not only does this payoff the principal on your mortgage quicker but you also save on interest payments over time.

You have the potential to save thousands here.

3. Pay off student loans

If you have private student loans then now is a great opportunity to pay some off.

Why private student loans?  Those tend to be the ones with the higher interest rates.  Even if they aren’t private loans you can still make some extra payments to help get rid of your loans earlier!

4. Car loan

Pay off all or at least some of your outstanding car loan.  Make sure the payment goes toward the principal.


5. Contribute to an IRA

Get money into your IRA now so you aren’t waiting until the last minute next tax season.  A Traditional IRA will give you tax breaks now while a Roth IRA gives you tax breaks when you retire.

Add a little padding to your financial future now so you don’t have to worry so much later on.

6. Contribute to a 529 plan

Not only are you investing in your children’s college future but many states offer plans with tax advantages.

7. Put it into a high-yield savings account

Sock it away and earn better interest than you would n a brick and mortar bank. (Check out some great offers and bank rates for high-yield accounts.)

8. Buy CD’s (Certificates of Deposit)

Set up a CD ladder for continued returns.

9. Start a small business

It doesn’t take a lot of money to start up a small side business.  You could even try your hand at creating a website!

10. Build Up Your Emergency Savings

If you don’t already have 8-12 months of emergency savings away then now would be a good time to start!

11. Invest in Stocks

Take a small amount that won’t hurt you if you lose it and learn to invest in stocks.  You can open up an inexpensive online brokerage account.  (Check out  Sharebuilder, TradeKing, and some others for low cost trades).


12. Take a College Course

Register for a college course or technical course.  This could be for your own interest or as a way to help advance your career.

Think about it, you might be able to take a course that could potentially put you in line for more money in your career.

13. Travel and Go On Vacation

Take the money and run!

Ok, maybe not like that but it could be a nice chance to plan out a great vacation with the family!  I’m always one for saving but building great memories with your family is important too.  Everything in moderation.

14. Fix Up Your Home

Paint, renovate, upgrade appliances, get new furniture – make your home a nicer place to liveIdeas for your income tax refund in.

Some renovations can yield tax breaks while also building up value for your home should you ever want to sell.

15. Set Up a Fun Money Account

Take the refund and put it into a sub account in Capital One’s online 360 Savings (or similar savings account).  Label it fun money.  Throughout the year take money out to do things like go to the zoo, amusement park, museum, movies, etc…

Do this and you have money set aside to have some fun with.  It also keeps you from reaching into other funds you may need or worse, using credit you might not be able to pay back quickly.

16. Upgrade Your Work Wardrobe

Replace some of those worn-out threads.  It can make you feel better at work as well as look better to get you noticed.  A few quality pieces might be all it takes to improve your wardrobe.

You never know, your boss might take notice and put you up for that next promotion.

17. Take Care of the Car

Get your car a tune-up and a full detail cleaning.  Taking care of your car will help it last longer and perform better saving you money in possible future repairs.  It will also help the re-sale value of your car should you want to sell it.

18. Grow a Garden

I love our modest garden.  It’s so relaxing and satisfying taking care of it.  You get an extra bonus if you can grow your own vegetables to eat!

19. Donate to Charities

Give money/time to those who need it more!

20. Eat Better

Have you been telling yourself that you would eat better if you could but it’s too expensive to eat more natural and organic?  Put the money aside to buy better food for yourself and build up better eating habits.

21. Enroll the Kids in an After School or Weekend Program

Sign them up for martial arts, little league, soccer, music, swimming, dance, etc…  You not only enrich them you also might be able to give yourself some free time too.

22. Take Up a New Hobby

Learn a musical instrument, play chess, learn a language!

23. Get Together With Old Friends

Call up some of those old buddies and treat them to a night out to the local pub or to a local sports game.

24. Take Your Spouse Out On a Date

Hire a sitter and treat your spouse to a night on the town!

25. Do Something You’ve Never Done Before

Think outside the box and stretch your boundaries.  Go out and live. Experience.  Create great memories.

Of course these are all suggestions.

Make sure you take some time and think about what you will do with your income tax refund.  Don’t be impulsive and let that money burn a hole in your pocket.  Be responsible and take care of debts.  Have a little fun too, if you can.

What will you be doing with your income tax refund (if you are getting one)?

Article Name
How to Spend Your Income Tax Refund - 25 Ideas
Do you get a big income tax refund. Don't let it go to waste. These are 25 great ideas for your income tax refund that you won't regret doing.
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Published or updated April 16, 2015.


  1. All of those are great ideas. This year our federal refund was about the same amount as what we owed the state. But last year our refund and a bonus my husband got from work was enough to pay off the remainder of the loan on one of our cars. That was a great feeling!

    Hannah’s last blog post..Lavazza Calendar 2009

  2. I’m a car guy, so you’d think my vote would be for a good car detailing, but I am a big supporter of the get out of debt option. With the economy the way it is, you don’t want to be messing with bad CC debt if you don’t have to. Just get it paid off, and relieve the stress.

  3. My refund went directly back to the government to pay for my first quarter estimated tax payment. Ugh. I hate taxes.

  4. I still dont know if I’m getting anything back (long story) but if I do, it will all go to medical bills.

  5. medical bills are way to expensive now days, I dont know, there should be something done about it…it sucks and more with this recession going on now.

  6. Nice job, very detailed ideas! I just posted on this, today, too. My recommendation is definitely to reinvest it back into producing new cashflow streams – unless, of course, there’s an urgent piece of debt or emergency that needs to be attended to.

  7. Mine was small but enough to pay on my small business loan.

  8. I think most people, when they get their tax refunds, would use it to either pay bills/debts, or put it into savings. I personally would use mine to put into savings, since I’ve cleared my debts ages ago.

  9. Glen Craig says:

    Great ideas everyone!

  10. Pay OFF DEBT! That is what I’m all about this year. Got to kill the debt beast.
    Great ideas all around though, it is a debt killer for me though!

  11. Well, we’re not getting any kind of refund. But in a positive spin, my quarterly taxes forced me to finally start attempting a budget. This way, I can put away money each week, rather than have to miss a large chunk every few months.

  12. Barbara Ling says:

    Excellent ideas, I especially like “Do something you’ve never done before – Think outside the box and stretch your boundaries.” Good stuff!

  13. Well said! Paying off debts and savings should be the top two items on everyone’s list.

  14. We’re paying off a small debt, pre-paying our annual insurance for the car, the abode, and life insurance, and adding to the emergency fund.

  15. Great ideas! We will probably be getting about $1000 back and will be putting it towards one of our financial goals.

  16. These are some great options. I would tend to say that if you have debt then that should be the first thing to be attacked with any refund and then move on to saving/investing. We got a whopping $160 combined between the feds/state so it just went into savings.

  17. We’re remodeling! 🙂

  18. Jane Savers says:

    Sitting at home today waiting for the window installers to arrive. I had hoped my return would pay for my new kitchen window but it only paid for half. The window needed to be replaced and I did not have enough cash to do it.

    Next year I will put the return in to my RRSP.

  19. Great tips. I started my own side business and it wasn’t as hard as I thought. It’s a great way to make extra income!

  20. This year I’m using my refund to move cross country! Scary and exciting all at once!

  21. Great thoughts. We are aiming on paying off all credit cards, then fixing my truck, oil change and a new tire for her car, and if Ams if Amy is left, get a camper trailer.

  22. Some great ideas here. We actually took our federal refund check today to the credit union and put more than half in our savings account. This will net us a few pennies more in dividends but why not? Over the next couple weeks we’ll use it towards bills. We took some cash out today and bought ourselves a new really nice mixer that was on sale plus the store was offering bonus dollars towards a future purpose. Those we will use next week to buy some good cookware. We want to do a lot more cooking and baking at home. So we’ll save money that way plus we’ll be doing some new things together. Win-win in my book!

  23. Im going to go around and fix things that stress me out or are constant battles or problems that I put on the back burner all year. Im going to fence in my front yard so the dogs dont bulldoze people when they come in anymore. I hate that they do that…Just to run the neighborhood. Well not anymore. No more stress with that. Also the bathroom floor is rotting. Its very soft next to the tub. Also put outdoor lights up around my home. Get a new alarm key for my car so I can just hit the unlock button or pop the trunk with ease. Get my check engine light looked at. Its been on for a year. Also a year family pass to the rec center so we all have something to enjoy all year long. If I get all that done I will be very happy. If I still have more I will go nuts at costco.

What Do You Think?