The average federal tax refund this filing season has climbed to roughly $3,500, representing a jump of more than 10% compared with the same period in 2025, according to IRS data.
New deductions introduced through the One Big Beautiful Bill Act, including breaks on tips, overtime, and auto loan interest, have pushed refund checks higher for millions of households across the country.
For many families, that refund may be the single largest lump sum they receive all year. The temptation to spend it on wants rather than needs is strong, especially after months of rising gas prices that have squeezed household budgets from coast to coast.
Suze Orman, the bestselling author and longtime personal finance advocate, is not interested in letting you waste the opportunity. She has a specific warning for anyone expecting a check from the IRS, and it starts with one word you may not want to hear.
Orman says your tax refund needs a plan before it hits your checking account
Orman’s central message is blunt: if you do not have a plan for your refund before it arrives, you will spend it on things that do not strengthen your financial position.
She urged readers to focus on needs rather than wants, emphasizing that the current economic uncertainty makes treating a refund as a planning tool more important than it has been in years, she wrote in a recent blog post.
“It seems that tip and overtime earners were incentivized to file early, potentially in anticipation of larger refunds,” said Andrew Lautz, Director of tax policy for the Bipartisan Policy Center.
Orman specifically recommended thinking ahead to expenses you know are coming in the next 12 months, such as a home insurance premium or vehicle maintenance, and earmarking refund dollars for those obligations now rather than waiting until the bill arrives.
The approach, Orman argued, turns a one-time deposit into months of reduced financial stress rather than a few weeks of discretionary spending.
IRS data shows refunds are running 11% higher than last year’s filing season
The numbers behind Orman’s urgency are substantial and well documented by federal data. The average federal refund reached $3,462 as of April 3, 2026, representing an 11.1% increase from $3,116 during the same period in 2025, according to IRS filing-season statistics.
The total amount refunded through that date reached $241.7 billion, outpacing the prior season by $30.7 billion. Nearly 70% of returns filed so far have resulted in a refund, up from roughly 63% in 2025. The IRS confirmed that more than 80% of refunds were issued in fewer than 21 days, with over 98% delivered through direct deposit.
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The speed of processing means most Americans who filed before the April 15 deadline have already received their money or will see it land in their accounts within days. A CNBC and SurveyMonkey quarterly money survey found that among filers expecting a refund, roughly 23% planned to use the funds to pay down credit card debt, and another 23% said they would save the payment.
The larger refund checks are also arriving at a moment when household finances remain under pressure despite steady employment levels. Credit card balances nationwide recently crossed $1.3 trillion, according to Federal Reserve data, while delinquency rates on auto loans and credit cards have continued to rise across several income brackets.
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Orman outlines five specific uses for your tax refund in 2026
Orman laid out a prioritized list of refund uses in her blog post, starting with the most immediate household financial pressures and building toward longer-term financial goals that compound over time.
The national average gas price reached $4.52 per gallon as of May 7, 2026, up roughly 53% since the start of the U.S.-Iran conflict in late February.
Orman’s prioritized tax refund uses
- Absorb rising essential costs: Orman recommended using refund dollars to offset higher grocery and fuel expenses, stretching the money across several months rather than spending it in a few weeks, she wrote in the post.
- Invest in vehicle maintenance: Spending $1,000 to $2,000 on repairs now can delay the need to purchase a new car, which, Orman said, represents significant savings, given that vehicle prices and auto loan rates continue to trend higher.
- Build emergency savings: Orman recommended building emergency savings via a high-yield savings account; at 4-5%, a $3,500 deposit would generate roughly $140-$175 in annual interest.
- Fund a medical out-of-pocket reserve: Orman urged readers to know their maximum out-of-pocket health insurance costs and set that amount aside to avoid turning medical bills into credit card debt.
- Contribute to a 2026 Roth IRA: Investing $3,500 today at a conservative 5% annual return could grow to more than $9,000 over 20 years in a tax-free retirement account, Orman wrote. The 2026 Roth IRA contribution limit is $7,500 for those under 50 and $8,600 for those 50 and older, the IRS confirmed.
Rising costs make Orman’s refund advice especially relevant for households in 2026
The financial pressure facing American households gives Orman’s advice a sharper edge than it might carry in a calmer economic environment. Gas prices have surged from roughly $2.91 per gallon in late February to $4.55 as of May 7, driven largely by disruptions to oil shipments through the Strait of Hormuz since the start of the conflict in Iran.
That increase alone adds roughly $75 to $100 per month in fuel costs for a household driving an average number of miles, eating directly into the budgets of families who might otherwise direct their refund toward savings or debt repayment.
Robert Brokamp, a certified financial planner and senior advisor at The Motley Fool, told USA Today that retirement savings for most Americans should be built on a foundation of index funds, reinforcing Orman’s point that even modest refund contributions to a Roth IRA can compound into meaningful wealth over decades.
Fidelity has shown that Roth IRA contributions can also serve as a backup emergency savings account, since you can withdraw your contributions at any time with no taxes or penalty.
Related: Suze Orman shut down a caller’s desperate 401(k) plan
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