Consumers are also expected to spend a total of $5.8 billion on tax preparation services.
A record low of Americans will spend their tax returns this year while the second-highest number on record will put their money into savings, according to the National Retail Federation.
The findings are part of an annual tax return survey conducted with Propser Insights and Analytics.
Of the 66 percent expecting a refund this year, only 20.9 percent will spend their refunds on everyday expenses; 8.7 percent make a major purchase such as a TV, furniture or car; and 7.6 percent will splurge on treats like dining out, apparel or spa visits. The numbers are down from 22.4 percent, 9.2 percent and 8.3 percentlast year, respectively, and highlight record lows in the survey’s history.
Meanwhile, the number planning to spend their returns on vacations dropped to 10.7 percent from last year’s 11.4 percent, the lowest since 10.3 percent in 2013. Furthermore, 8.8 percent plan to use their refund on home improvements.
“Millennials are mindful of how they spend their hard-earned money these days, especially when it comes to any refund they expect from their taxes,” says Pam Goodfellow, consumer insights director, Prosper Consumer Insights. “Although Millennials and Gen X are focused on allocating their refunds to savings or reducing their debt, young adults are also apt to seize the opportunity to treat themselves to a little discretionary spending.”
Rather than spending their refunds, 48 percent of consumers plan to put the money into savings, second to only last year’s record-high of 49.2 percent. In addition, 35.5 percent will use the money to pay down debt, up from 34.9 percent last year but trailing the peak of 48 percent in 2009.
“Financial security continues to be top-of-mind for all Americans, and consumers are hanging on to their tax refunds tighter than ever,” says Matthew Shay, president and chief executive officer, NRF. “Consumers are leveraging their tax returns to build up their savings, but that’s good news in the long run because money saved today is money that can be spent down the road, particularly during the back-to-school and holiday seasons later this year.”
The survey also showed: 68 percent of Americans plan to file their taxes online, the most in the survey’s history; 39 percent will use computer software to prepare their taxes on their own; 21 percent will hire an accountant; 13 percent will prepare their taxes manually; and 10 percent plan to have a spouse, friend or relative help.
Also, while 18 percent plan to hire a tax preparation firm, consumers are poised to spend $5.8 billion on such services, which averages to $131.66 per person.