Study reveals how consumers plan to use — or not use — their tax refunds
Consumers don’t plan to do much shopping with their 2018 tax refunds.
That’s according to data from market intelligence firm Numerator Insights, which found that 55% of individuals plan to save all or most of their 2018 tax refunds. And of those individuals planning to spend their refund, 40% said it was to pay down debt, while only 17% planned to use it to buy something for themselves or their family.
There have been many stories that refunds would be much lower and could have a negative impact on consumer spending this year, Numerator added. According to the latest IRS statistic, the average refund size this year is down $10 from last year. https://www.irs.gov/newsroom/filing-season-statistics-for-week-ending-march-22-2019
In other tax refund usage intention data from Numerator’s Insights:
• Electronics are often thought of as one of the top categories to benefit from tax refunds. There is a slight increase in the sales of computers and gaming products during the month of March, but other electronics don’t experience the same boost. Categories like appliances and home improvement tools did not show a significant rise during tax season, though home and car repairs are commonly cited as intended uses for tax refund dollars.
• Size of refund appeared to be a slight indicator of spending intentions as those who received a larger refund this year (30%) were more likely to put it into savings (38%) or to buy something for themselves or family (25%). Those with smaller refunds (34%) were likely to use it to pay down debt (43%).
• Shoppers made it clear in Numerator’s survey that a boost in spending during tax season is not a foregone conclusion, but that does not mean there is no opportunity to capture some incremental dollars.
“Businesses must truly understand their shoppers: demographic makeup, where they like to shop, and which forms of media they most likely use for shopping and product research in order to deliver effective incentives that might change a shopper’s plans of saving their refunds in favor of making an unplanned purchase,” the firm stated.
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