How to make the most of your tax refund, by Suze Orman

You may have a welcome surprise when you file your federal tax return for the 2025 tax year: A refund, even if you don’t typically get one, or a bigger refund if you tend to overpay your taxes and get some money back after filing. Here’s why—and how you can make the most of yours.

What you’ll learn

• Why you may receive a tax refund this year—or a bigger one
• Challenge yourself to do more with your tax refund this year
• Set up a plan for your refund NOW so it’s easy to follow through
• Four big ideas for your tax refund

Why you may receive a tax refund this year—or a bigger one

Last summer, Congress passed new legislation that changed the 2025 tax rules for some items. But the IRS didn’t update the information employers use to decide how much of your income to “withhold” as taxes. Instead, for the 2025 tax year, all the tax breaks you may qualify for under the new legislation will show up when you file your federal tax return. Many households will have lower tax bills than if there had been no tax legislation, so that means refunds (or bigger refunds) are likely.

Among the biggest tax breaks from the 2025 legislation are an increase in the standard deduction everyone can claim, a higher child tax credit, and a big break for older Americans.

Individual filers at least 65 years old with modified adjusted gross income below $75,000 ($150,000 for married couples with joint income below $150,000) will qualify for a $6,000 tax deduction. (There is a reduced senior tax break if income is between $75,000 and $175,000 for individuals, and $150,000-$250,000 for married joint filers. Above those limits, there is no deduction.)

Challenge yourself to do more with your tax refund this year

Okay, so that’s the good news.

My challenge to you, right now, even if you don’t plan to file your tax return for a few months, is what you intend to do if you receive an unexpected refund, or an unexpectedly larger refund than last year?

This is a potentially huge opportunity to build financial security. The average refund last year was more than $3,000. But if you don’t create a plan for what you will do with the money, I think there’s a good chance it just ends up in your checking account and gets spent without any strategic plan.

Set up a plan for your refund NOW so it’s easy to follow through

To avoid that missed opportunity, I want you to think through the best use of any refund that lands in your checking account in 2026. Making it a formal intention ahead of time helps increase the odds you will follow through. You can use the money for multiple goals.

Four big ideas for your tax refund

Here are my top ideas for this year.

• Emergency savings. If you don’t have at least eight months of living expenses saved up, this is such a great use of any 2026 tax refund. It is always smart to have this cash cushion to deal with life’s curveballs, but I think it may be especially smart this year, as we are beginning to see signs of unemployment inching up.
• Insurance premiums. I know for many of you, just about every form of protection is costing more: Car insurance, home insurance, and for those relying on the ACA marketplace for health insurance, premiums have risen as well. Use your refund to stay on top of these increased costs and don’t allow insurance to lapse.
• Pay down credit card debt. The average interest rate on unpaid balances is around 22% these days. Reducing or wiping out high-cost debt is a huge win. But only if you can promise yourself that you will do everything possible to avoid running up new balances you can’t pay off in full.
• Contribute to a Roth IRA. Or contribute more. The maximum contribution for 2026 is $7,500 for anyone under age 50, and $8,600 for anyone at least 50 years old, as long as your income qualifies. In 2026, individuals with modified gross income below $153,000 and spouses with joint income below $242,000 can contribute the maximum. If your income is higher, you may qualify for a reduced contribution. But once your income is above $168,000 (individual) or $252,000 (married couple filing joint return) you can’t contribute.

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