What to do With Your Tax Refund

This post may contain affiliate links. Feel free to view my disclosure here.

Last year, I wrote a post titled  Wasting Money: 5 ways to spend a tax refund. It was very popular. People agreed that the ideas listed were not the best ways to spend a refund. Some people couldn’t even imagine that folks would waste their money like that. Unfortunately, it does happen. I hope that none of my readers spend their tax refund in any of those foolish ways

This post is the exact opposite of the other one. What to do with your tax refund is the name of today’s post, I share four things that you can do with that money. These ideas are relatively easy.

What To Do With Your Tax Refund

Pay Off Debt

The first thing that you can do with your tax return refund is to pay off debt. I’m not a fan of debt at all. I’ve been on my debt-free journey for five years now. Some people are able to eliminate their debt fast, but most people aren’t. It’s been an up and down journey, to say the least.

Debt can stop you from doing a lot of things if you let it get out of control. Certain types of debt collect interest which makes the amounts higher to pay off over a period of time. Student loans and credit card debt are two examples. Unfortunately, I have both, but they are going down. Using your tax refund to pay off debt might be tough at first (especially if you have a big refund), but in the long run, it will be a great move. A couple of years ago, I used my refund to pay off a small loan that I had. Sometimes you have to do what you have to different things to get rid of that debt.

If you don’t want to use all of your refund to pay off your debt, at least use half of it. Paying off some is better than doing nothing. This year, I used some of my refund to eliminate most of my credit card debt. I saved the rest.


The second smart thing that you can do is to save some of your money. This is the perfect time to open an emergency account. If you already have one, add some of your refund to it. I used the other part of my taxes and added it to my emergency account.

You would be surprised at how many people don’t have an emergency or regular savings account. I worked at a bank for almost two years, and I would say that about 40% of my customers didn’t have a savings account. For the people that did have one, many of them didn’t have at least a hundred dollars in there. That was sad. It’s time to get a hold of your finances and get this account going. You can start your account with an online bank, or you can go to your nearest credit union or bank. Below are two banks that I suggest.

If you are in the Atlanta area, check out Delta Community Credit Union. They have great customer service and treat you like a person, unlike some banks. They aren’t trying to sell you products. They are there to actually help. You can get more information about Delta Community Credit Union here.

If you are looking to start an emergency account separately from your regular bank, look into Capital One 360. They have thousands of no-fee ATMs. Their savings account also has 5 times the national average savings rate. You can get a $25 bonus when you open an account with Capital One 360. Visit my exclusive link for more details.


The third thing that you can do is to invest some of your tax refund money. Since I’m paying off debt, I don’t do as much investing as I want to. That will change once I’m debt-free. I have invested some money though. I’ve used Stockpile and Robinhood. I currently still use Robinhood to purchase shares a few times per year. I like their platform. It’s very easy to use for beginners. All you have to do is download the app to your phone, add some funds to your account and start trading. Robinhood is also giving new users one share of free stock. Check them out here for more info.

If you don’t want to check out Robinhood, you can check out a newer app called Webull. It’s another stock trading platform.


If you want to learn more about investing from people that are making it happen.

Teri Ijeoma teaches people how to trade. She has several courses that are available to help you become a pro when it comes to trading. For more information, check out Invest With Teri today.

Tela Holcomb is a six-figure stocks and options trader. She believes that anyone can learn stocks when it’s put in plain English. You can visit her site here.

Kevin Matthews II owns Building Bread where he helps millennials set and achieve their financial goals. He has a few free classes that will help you when it comes to investing. You can view them here.

Start a Business

The final smart thing that you can do with your refund is to start a small business with it. To be honest, this one is not for everyone. I know plenty of folks out there that don’t want to be business owners. That’s perfectly fine. However, if you are thinking about starting a business,  the opportunities can be endless depending on your refund.

You can start some businesses with as little as five hundred dollars. Some examples are:

Lawn Cutting Service

Car Detail Service

EBay Store (I had to include this.)

Shopify or Esty

Those are just a few ideas. There are hundreds more out there. Do your research, plan it out and make it happen. If your refund isn’t that big, you can at least purchase some things and start a side hustle.

To summarize this article, the four things to do with your tax refund are:

  • Pay off debt
  • Save Money
  • Invest
  • Start a business

If you’re getting a refund, what are some smart ways that you plan on spending it? Do you know of any other ways that I didn’t list?



  1. Great ideas for sensible spending or savings. Just blowing that money when you Gabe debt or little retirement savings especially is silly.

  2. It’s funny how what seems like common sense isn’t that common among people. I bet that there are some people who will read this and still blow their refund on clothes a trip or stuff for their car all while not paying their rent or other bills.

    1. It is definitely crazy. I’ve heard that common sense doesn’t really exist that much anymore.

  3. hi jason; some good suggestions. i like number four best. 🙂 one of the things i love doing the most on my other site the midway marketplace is helping people wanting to start a second business with a hot dog cart bounce house or catering equipment. good post, max

  4. Good ideas, we sometimes to throw our tax refunds at our mortgage. It’s not much but it helps bring the balance down a bit faster 🙂

  5. These are all great ideas. I know I won’t always get a refund around tax time as my income will certainly increase over the years but I always make sure I do something productive with my refund each year. This year, I’m going to use it to pay a lump sum on my debt, half of my car insurance premium, and put the rest in my emergency fund or slush fund checking account.

    1. That’s whats up. You have a great plan!

  6. This makes a lot of sense. I like the one about paying off debt first but here in Canada we have a tax-free Disability Savings account for eligible people. You can put in $1500.00 a year and the Government tops it up by $4,5o0.00. Pretty sweet deal and that’s where our son’s tax refund always goes.

    1. We need that deal here in the US.

  7. Great idea for managing budget and then paying off the debt. Debt is such a thing that keeps you in tension all the time, until you finish it.

    All the best with your planning and I hope you will get rid of it soon.

    1. It sure does. I can’t wait until it is gone.

  8. Great advice Jason

    You sure listed great tips on how to save. Even though in my country, we aren’t used to taxes, I have taken note of some insight from this post. Thanks for sharing

  9. I always try to use my refund wisely, unfortunately, this year I worked an extra part time job, as a result I broke even on the federal and owed a little for State.

  10. Ah, I wish I was getting a tax refund. Totally not the case for me. Having said that, you provide some excellent advice. Many people look at their tax refund as play money and blow it on something frivolous. All your suggestions basically create more money in the end which is always a good thing.

  11. All wise ideas. Since both my wife and I earn 1099 income which doesn’t have tax withheld we have to make estimated tax payments thoughout the year. So if I have overpaid I usually end up applying it to the next year so I can lower my estimated payments.

  12. All good ideas Jason with paying off debt being the most important to building a good financial foundation; especially credit card debt.

  13. Great advice on using your refund wisely. Afraid I’m not looking for a refund this year.

  14. Kire Sdyor says:

    Jason, now you tell me that the last posts was about BAD uses of my tax refund. What am I going to do with all these losing scratch tickets now?

  15. I think people overlook the “start a business” idea. If you get a sizable tax return it’s a GREAT opportunity to invest a little into a business idea. Worst case scenario you lose the money, but more likely than not you will create a new income stream!

    1. Agreed. I also think fear stops them as well.

  16. What is a tax refund? Independent contractors like me never get a refund. Anything left over after the last quarterly payment just is applied to the first quarterly payment of the next year. Before I retired and took up some consulting it was kind of fun to actually get refunds, now I just write the US Treasury department checks every three months!

    1. One I’ll be writing those quarterly checks!

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