Tax Blog

Best Ways to Maximize/Spend/Reinvest Your Tax Refund?

If you’re expecting a tax refund, you may be licking your chops as you consider all of the ways that you could spend it. But before you commit, you should consider some words of advice from experts in the industry. Keep reading to get their best recommendations.

Wade Schlosser

Wade Schlosser

Wade Schlosser is the CEO and Founder of Solvable, as well as a financial online generation company. Collectively, our sites garner more than 4.3 million unique visits per year, with over $75 million in business and consumer tax debt successfully resolved from our network of advertisers.

Use at least 50% for investment

I always recommend that people use at least half of their tax refunds paying down high-interest, unsecured debt if they have any. This may include student loans, personal loans, or credit card debt.

Most people look forward to their tax refund to splurge on a treat – whether that’s a family vacation or a new 4K TV. I think it’s okay to treat yourself, even if you have debt. But at least take a step toward paying down that debt by using half your tax refund.

If you don’t have any debt, consider investing in stocks, options, or EFTs. Apps like Acorns and Robinhood make it easy for beginning investors to get started. Both apps let you invest in fractionals, or portions of stock. This helps you build a more diversified portfolio and invest in companies you believe in, even if you can’t afford a full stock share.

Bottom line: You don’t have to use your entire tax refund wisely or responsibly. It’s okay to set aside a little “fun money,” but I recommend people use at least 50% to pay down debt or make an investment.

Kate Chrisman

Kate Chrisman

Kate Chrisman is an editor at DoughRoller. She has over a decade of experience writing on finance, energy, and sustainability. She thinks we should all talk a little bit more about money – how we earn it, how we spend it, and how we save it.

Save for travel

Assuming you’re on top of your financial game, meaning you’ve paid down any credit card debt, maxed out your IRAs, and started a general emergency fund – here are three ways to maximize the benefits of your 2019 tax refund.

Start an emergency medical fund
More than half a million Americans file for bankruptcy each year because of medical bills, according to a 2019 study. A great way to use part of your 2019 tax refund is to start an emergency medical fund. Having a cushion for unexpected out-of-pocket costs, especially for those on high-deductible plans, is a smart way to deal with rising (and often unavoidable) healthcare costs. This can be as simple as opening a high-interest savings account, putting money in, and not touching it unless it’s a real medical emergency. If you can, try and save at least as much as your deductible.

Money can’t buy you happiness, but research shows experiences can. Take that hard-earned tax refund and tick something off your bucket list – maybe that’s a trip to Napa, a skydiving course, or seeing a concert at Red Rocks. Researchers have also found that anticipation of the desired event can lead to happiness – so plan it out a few months in the future and double the happiness impact from your tax refund.

Go Renewable
If you own your home, look into local options for going solar. This can help save money in the long term on rising electricity bills while doing good for the environment. If your tax refund is limited, check out the many companies that offer low or zero-down financing plans. It’s also worth investigating state and local incentives that can bring upfront costs to purchase solar panels down significantly.

Jesse Silkoff

Jesse Silkoff

Jesse Silkoff, founder of MyRoofingPal, an online marketplace that connects people with the best local, residential and commercial roofers in 4,000 cities across the U.S.

Raise your credit score

Maximizing your tax refund really depends on where you are in your life and what you want to accomplish. For some people, this is going to mean putting a down payment on a car or home, adding to an emergency fund, or paying down debt. For others it may be the windfall needed as an excuse to splurge a little on something they’ve been holding out on buying.

In my opinion, though, most people can benefit from investing their tax refund. The easiest way to do this is to actually invest in raising your credit score, as that will help you in all aspects of your life later on. Ask your bank about getting a secured credit card. You’ll put a certain amount down (which usually becomes your credit limit) and use the card for small, routine purchases like gas, then pay it down at the end of the month. This is a great way to establish a pattern of good credit, or to improve a score that has dropped.

If your credit is in good shape and you want to invest in something a little more exciting, why not look into real estate crowdfunding? There are sites out there like Fundrise where you invest a minimum of $1,000 in a commercial property. You then have a stake in it and make money back on your investment when the property is sold. It’s a great way to see if real estate investment is for you without having to commit a prohibitively large sum of money up front.

David DiNardo

David DiNardo, President and CEO of Envolta, a financial advising company.

Emergency fund

When deciding how to spend your tax refund, there aren’t too many wrong answers — but there are some that are better than others. My suggestion is to create an emergency fund. It can be hard sometimes to just put money aside for something you may never need. So what better time to put money aside, or even what better money to put aside than “bonus money.”

Of course, the trick here is to continue to live your life, not assuming you’ll receive a tax refund. In other words, don’t plan your budget on receiving that money, because you can’t ever be sure how much or how little you’ll ever end up receiving. Once you get it, add it to your fund. If ever an unfortunate circumstance were to arise, you’ll have the money you need and will be able to evade a magnitude of headaches and stress.

Kari Lorz

Kari Lorz

Kari Lorz, head mama money nerd at Money for the Mamas.

Be smart and strategic

The smartest thing that you can do with your tax return is to SLOW DOWN! There are probably lots of things that you would like to do with it, but you need to be smart and strategic if you want to get the most out of it!

Once you’ve slowed down, answer the following questions.
• How much do you have in your emergency fund? 6-9 months of living expenses?
• How much debt do you have? Crush it using the debt snowball method.
• If there is anything leftover, go have fun with the 15% that remains, or use it to fund your wish list sinking fund.


Nathan Wade

Nathan Wade, Managing Editor for WealthFit Money, a financial education blog dedicated to curating advice on investing, entrepreneurship and money.

Invest in Your Side Hustle

If your growing side hustle has the potential to earn you extra income, consider investing a portion of your tax refund back into your side hustle to start growing it into a viable small business. You can use the extra cash to upgrade your computer software, book yourself a ticket to a conference or trade show in your side hustle’s niche or hire a freelance content creator.


Tim Yoder

Tim Yoder, Tax Analyst of

Retirement plans

Taxpayers should consider investing their tax refunds in retirement plans. It might not bring immediate joy like a new TV, but you’ll feel good doing the responsible thing and will be very grateful to have the extra money when you retire. You are able to contribute $6,000 to an IRA for 2019 for both you and your spouse. The maximum contribution increases to $7,000 if you or your spouse are over the age of 50.

• Roth IRA contributions: While Roth IRA contributions won’t affect your 2019 tax refund, they will grow tax free in the future.

• Traditional IRA contributions: Unlike Roth IRA’s, you receive a tax deduction for traditional IRA contributions, even if the contribution isn’t made until April 15, 2020. This will increase the refund you receive for 2019. You’ll have to pay tax on the earnings of the traditional IRA when you withdraw it.


Holly Wolf

Holly Wolf – Director of Customer Engagement at SOLO Laboratories,Inc

Reduce your debt

1. Take at least 50% of your refund to reduce your debt. If you can afford to do more, do it. I suggest making your regular payments and using the tax refund as additional or principal payments.
2. Take 40% to invest in your retirement, specifically a Roth IRA.
3. Take 10% and spend it on something that brings you joy. It may be a fancy cup of coffee, or perhaps it’s enough for lunch or dinner.

This is a crowdsourced article. Contributors are not necessarily affiliated with this website and their statements do not necessarily reflect the opinion of this website, other people, businesses, or other contributors.