A recent survey by Credit Karma reveals that 50% of millennials depend on their tax refunds to cover essential expenses, compared to 37% of taxpayers overall.
The study, conducted between December 20, 2024, and January 4, 2025, found that financial strain is driving many to use their refunds to pay down debts. Among millennials, 59% plan to use their refunds specifically for debt repayment.
Several factors contribute to this reliance.
The rising cost of living is a primary concern, with 45% of respondents citing increased expenses for necessities like housing and groceries. Inflation is another significant factor, affecting 41% of those who depend on their refunds. Additionally, 37% report living paycheck to paycheck, while 21% say their savings have been depleted, making their tax refund a crucial financial lifeline.
Debt is a major issue for millennials, with 26% having maxed out credit cards and planning to use their refund to manage outstanding balances. Another 23% intend to allocate their refund toward paying down high-interest debt.
The findings highlight the essential role tax refunds play in the financial stability of many millennials. With rising costs and mounting financial pressures, tax season serves as a vital period for many young adults to regain control of their finances.