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NRF: Consumers are tightly holding on to their tax refunds


Retailers shouldn’t expect consumer tax refunds to equate into a sales boom anytime soon.

A record low number of Americans will spend their tax returns this year, while the second-highest number on record will put the money into savings, according to the annual tax return survey released by the National Retail Federation and Prosper Insights & Analytics. The study, which is based on responses from 7,609 consumers, was conducted Feb. 1 - Feb. 8.

Of the 66% of consumers who are expecting a refund this season, only 20.9% will spend their refunds on everyday expenses, 8.7% will use them for major purchases such as a television, furniture or a car, and 7.6% will splurge on special treats like dining out, apparel or spa visits. These numbers are down from 22.4%, 9.2% and 8.3% respectively, from last year, and are record lows in the history of the survey.

The number planning to spend the money on vacations dropped to 10.7% from last year’s 11.4%, the lowest since 10.3% in 2013. In addition, 8.8% plan to use their refund on home improvements, the study reported.

Rather than spending their refunds, 48% of consumers plan to put the money into savings, second only to last year’s record high 49.2%. In addition, 35.5% will use the money to pay down debt, up from 34.9% last year, but far below the peak of 48% seen 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,” NRF president and CEO Matthew Shay said. “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.”

According to the survey, 68% of Americans plan to file their taxes online, the most in the survey’s history. About two in five (39%) will use computer software to prepare their taxes on their own, while 21% will hire an accountant, 13% will prepare their taxes manually and 10% plan to have a spouse, friend or relative help. With nearly one in five (18%) planning to hire tax preparation firm, consumers are poised to spend $5.8 billion on these services, which averages to $131.66 per person among this group of filers.

Of those surveyed, 22% have already filed their taxes, 37% plan to do so in February, 26% will file in March and 15% will take their time and file at the last minute in April, the survey reported.
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