Skip to main content

Perception of Tax Refund as "Bonus" or "My Own Money" Influences Spending

Print PagePrint Page


How consumers view their tax refund – either as a “bonus” or money the government owes them – influences their spending habits, according to new research by the Georgetown Institute for Consumer Research, sponsored by KPMG. More than half (53 percent) of consumers who think of their refund as a year-end bonus or unexpected money in the bank plan to make a purchase with the check. Those who think of their refund as their own money are less likely to spend it.

The survey also shows that the mentality of consumers affects where they plan to shop. Consumers who feel they are getting unexpected money plan to spend more of their refund at stores where they rarely shop throughout the year. On the other hand, consumers with the “getting back my own money” mindset plan to spend more of their refund at their tried-and-true, every day stores.

“Apparently all dollars are not created equal in the minds of consumers,” said Kurt Carlson, director of the Georgetown Institute for Consumer Research. “Consumers who see their refund as money owed them by the government believe their refund belongs where it can do good in the long run – in an investment, savings account, or as a means of debt reduction. In contrast, consumers who view their refund as a bonus believe the refund should be converted into a purchase right now. From a retail perspective, this means that much of the tax refund money that will find its way to the market this tax season will come from consumers who view their refund as a windfall that should be spent rather than saved.”

The survey results also show:

  • Early filers expect larger refunds than those who file closer to Tax Day. Early filers also plan to spend a greater proportion of their refund, consistent with the institute’s 2014 findings;
  • Looking at the refund as a whole, consumers plan to save about a third, use about a third to pay down debt, and spend the remaining third;
  • About half of consumers plan to use commercial software to file their taxes.

The 2015 Tax Refund Consumer Spending Survey was conducted during the last two weeks of March to understand consumers’ behavior around Tax Day. Respondents were drawn from an online sample of 1,018 U.S. consumers. To download the complete report, visit http://bit.ly/GUTaxDayReport.

About the Georgetown Institute for Consumer Research, sponsored by KPMG

The Georgetown Institute for Consumer Research, sponsored by KPMG, develops innovative, ground-breaking research to illuminate the challenges and opportunities of understanding and marketing to consumers. Combining the academic expertise at the Georgetown University McDonough School of Business and the deep understanding of the marketplace found at KPMG, the institute seeks to impact business practice and improve consumer decision-making. For more information or to read the latest research from the institute, visit http://msb.georgetown.edu/faculty-research/centers-initiatives/consumerresearch