You might be in for a pleasant surprise when you file your 2025 tax return — even if you’re not someone who typically gets a refund.
Why? Because new tax legislation passed last summer changed some of the rules. But here’s the kicker: the IRS didn’t adjust the usual withholding tables that employers use to take taxes out of your paycheck.
That means the full benefit of these changes won’t show up until you file your return — and for many people, that could result in a refund. Or a bigger one than usual.
So, what changed?
Some of the most notable updates include:
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A higher standard deduction (which reduces your taxable income),
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A larger child tax credit (which could mean more money back in your pocket), and
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A new tax break for older adults:
If you’re 65+ and your modified adjusted gross income is under $75,000 (or $150,000 for joint filers), you could qualify for a $6,000 deduction.
(There’s a partial deduction if you earn a little more, and it phases out entirely once income exceeds $175,000/$250,000.)
That’s the good news.
But here’s my challenge to you…
What will you do if you get a refund — especially one you weren’t expecting?
It’s easy for that money to land in your checking account and quietly disappear. You know how it goes… a few impulse buys, a couple “treat yourself” moments, and suddenly, it’s gone — with nothing meaningful to show for it.
But a little intention can go a long way.
Last year, the average refund was over $3,000. That’s not nothing. And this year, you may see even more.
So before that money arrives, let’s talk about how you can use it to strengthen your financial foundation — and maybe take a little weight off your shoulders.
1. Build or Rebuild Emergency Savings
If you don’t have at least a few months of expenses set aside, this is where I’d start.
Think of it as your peace-of-mind fund — not just for the “what-ifs,” but for breathing room.
Job market shifts, unexpected bills, or even surprise car repairs can hit hard. Having cash on hand means you won’t have to rely on credit cards or scramble when life throws a curveball.
2. Cover Insurance Premiums
Let’s be honest — just about everything is getting more expensive.
If your car, home, or health insurance premiums have gone up (especially if you’re on an ACA marketplace plan), your refund could help cover those costs without blowing up your monthly budget.
3. Tackle High-Interest Credit Card Debt
If you’ve got a balance on a card charging 20%+ interest (which, unfortunately, is pretty common), using your refund to pay it down is one of the best returns on your money you can get.
Just make sure you have a plan to avoid racking it back up — otherwise, it’s a short-term fix with no lasting impact.
4. Jump-Start Your Retirement Goals
Consider putting some (or all) of your refund into a Roth IRA.
The 2026 contribution limits are:
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$7,500 for anyone under 50
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$8,600 for those 50+
Income limits apply, but many people qualify. And the benefit of tax-free growth and withdrawals in retirement? That’s a long game worth playing.
PS: If you haven’t maxed out your Roth for 2025, you can still contribute to it until April 15th, 2026!
The Bottom Line?
A refund can feel like a bonus. But it’s really your money — and you get to decide how it supports your goals.
So before it hits your account, take 10 minutes to think about what would feel good long-term, not just in the moment.
Need help creating a simple, flexible plan for your refund — one that fits your real life?
Let’s talk. I’m here to help you make the most of what you have and move forward with clarity, confidence, and intention.
