A new income tax survey conducted by ACI Worldwide, in collaboration with YouGov, has revealed that nearly 40% of US taxpayers plan to use their tax refunds to pay off debt, such as credit cards and loans.
The findings suggest that the ongoing inflationary pressures are continuing to erode disposable income, with many Americans leaning on their tax refunds to manage financial obligations.
In addition to this trend, 44% of respondents indicated they would deposit their tax refunds into a savings account, reflecting a growing sense of financial caution and a shift away from immediate discretionary spending.
The results point to declining economic optimism as individuals prioritise debt reduction and financial security over consumption.
The survey also highlights a continued rise in the adoption of digital payment methods during tax season. Sixty-five per cent of respondents reported a preference for paying taxes digitally, while the use of paper-based cheques declined year-over-year to just 15%.
This decrease is largely attributed to Baby Boomers and Generation X, as younger generations increasingly favour alternative payment solutions such as PayPal, Google Pay and Apple Pay.
The shift toward digital convenience was also apparent in how respondents wished to receive their tax refunds, with 80% preferring electronic deposit over traditional methods.
“As we enter the tax season, many Americans are looking to maximise their tax refunds and make smart financial decisions, whether it’s paying off high-interest debt or building up their savings,”
said Ron Shultz, General Manager of ACI Speedpay.
“This year’s findings show that taxpayers are continuing to pivot to digital payment channels to pay taxes and receive their refunds quickly. ACI’s digital payment solutions empower Americans to meet their tax obligations in a fast and secure manner and take control of their finances.”
The survey also uncovered lower levels of awareness around common payment fraud schemes, particularly among Generation Z respondents.
This underscores the need for continued consumer education as a vital line of defence against tax-related scams.
Among those who reported encountering scams, approximately one-third were targeted by fraudsters impersonating the Internal Revenue Service (IRS) via phone or email.
The data also revealed a 3% increase in identity theft cases, where personal information is used fraudulently.
“Tax season is a prime opportunity for scammers to target consumers who feel overwhelmed by the complexities and time pressures of filing,”
added Shultz.
“By using secure digital payment channels with robust verification capabilities, taxpayers can safeguard their financial information and ensure that their refunds and payments are handled safely and efficiently.”
The survey also explored tax filing preferences, revealing that 39% of respondents plan to file electronically using popular software platforms such as TurboTax, H&R Block and TaxSlayer.
Another 27% will file electronically or by post with the assistance of a tax professional, while 11% still prefer to file via paper mail.
When asked how they would allocate their tax refunds, the top three responses were: 44% would deposit the funds into a savings account, 39% would apply the money toward outstanding debts, and 20% would use it for minor purchases, such as clothing or sporting goods.
Finally, the most common fraud experiences reported by respondents included phone scams (17%), phishing scams (16%), and identity theft (13%), even if the fraudulent attempts were ultimately unsuccessful.
Featured image credit: edited from freepik
