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5 Things You Can Do with Your Tax Refund
November 28, 2025
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Note: All tax information contained in this article is as of the publication date. Be aware that tax rules are always subject to change, and the IRS website is your official source for the latest forms and guidance.
If you’re expecting a tax refund this year, think about putting that money to work toward your financial goals, whatever they may be.
But before you do anything with your refund, make sure you don’t need that money to cover any essential expenses right now (e.g., car repairs, unexpected bills, etc.). In fact, it’s a good idea to check in on your emergency fund to make sure that it’s in good shape.
If your emergency fund is in order, here are five other ways you could put your tax refund to good use.
1. Give your retirement savings a boost
A tax refund can provide a great opportunity to show your retirement savings account some love. If you can, try to maximize your contribution to your 401(k) plan or IRA.
401(k) plan
For 2026, the standard annual contribution limit for a 401(k) plan is $24,500 ($23,500 for 2025).
Individuals who are 50 or older could make an additional “catch-up” contribution of up to $8,000 (if your plan allows it). In other words, for the 2026 tax year, if you’re 50 or older, you could contribute up to a total of $32,500 to your 401(k) plan ($24,500 + $8,000).
For more information on catch-up contributions, visit IRS.gov.
Important: Under a change made in SECURE Act 2.0, 401(k) plan participants age 60 to 63 will have a higher catch-up contribution limit. This higher catch-up contribution limit for 2026 is $11,250 (instead of $8,000). See the IRS press release here for more information.
IRA
For an IRA, the standard annual contribution limit is $7,500 for 2026 ($7,000 in 2025).
If you’re 50 or older, you can make an additional catch-up contribution of up to $1,100 in 2026. This means you could make a total contribution of up to $8,600 if you are eligible.
Good to know: Keep in mind that IRS contribution limits and rules are subject to change. Always visit IRS.gov or check in with a tax professional for the most up-to-date information.
2. Open a CD account
If you’ve already maximized your contributions to your retirement accounts for the year, congrats—that’s a serious accomplishment! But if you’re interested in other ways to put that tax refund to work, consider opening a certificate of deposit (CD) or a no-penalty CD.
CDs are a good way to boost your savings because they typically offer higher interest rates than a traditional savings account. There are also different CD strategies (e.g., CD ladder and CD barbell) that you can use to give yourself a little more flexibility when it comes to accessing your money.
Read more: Guide to CDs
3. Open a high-yield savings account
If you’re planning to make some major purchases in the near term and don’t want to tie up your money in CDs, you might also consider putting your refund into a high-yield savings account.
These accounts typically enjoy a higher interest rate than a traditional savings account. This means you can take advantage of the power of compound interest to help boost your savings while still being able to access your money quickly when you need it.
As you consider your options, pay attention to any minimum balance or minimum opening deposit requirements and account fees.
4. Invest your tax refund
If you are looking for potentially higher returns and have a tolerance for risk, investing your tax refund could be an option. Common types of investments include stocks, bonds, money market mutual funds, and exchange-traded funds (ETFs).
But remember, investing involves risk. There are no guaranteed or predictable returns. Potential market volatility means your investments could make money or lose money. You could even lose your principal, which is the amount of money you originally invested.
That being said, there’s also the possibility for gains when you invest. Historically, over long periods, financial markets have generated higher returns than interest earned in bank deposit accounts.
Read more: Saving vs. Investing
5. Pay down debt
You may also consider using your tax refund to pay down your debt if you still have student loans or outstanding credit card balances. Some experts recommend you tackle the loans with the highest interest rates first since higher-interest debt can be costly.
Remember, the quicker you pay off your debt, the sooner you can free up those dollars in your budget for something else.
This article is for informational purposes only and is not a substitute for individualized professional tax advice. Individuals should consult their own tax advisor for matters specific to their own taxes. This article was prepared by and approved by Marcus by Goldman Sachs, but does not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA, Goldman Sachs & Co. LLC or any of their affiliates, subsidiaries or divisions. Goldman Sachs Bank USA and Goldman Sachs & Co. LLC are not providing any financial, economic, legal, accounting, tax or other recommendations in this article. Information and opinions expressed in this article are as of the date of this material only and subject to change without notice. Information contained in this article does not constitute the provision of investment advice by Goldman Sachs Bank USA, Goldman Sachs & Co. LLC or any of their affiliates. Neither Goldman Sachs Bank USA, Goldman Sachs & Co. LLC nor any of their affiliates makes any representations or warranties, express or implied, as to the accuracy or completeness of the statements of any information contained in this document and any liability therefore is expressly disclaimed. You are not permitted to publish, transmit, or otherwise reproduce this information, in whole or in part, in any format without the express written consent of Goldman Sachs. This foregoing restriction includes, without limitation, using, extracting, downloading or retrieving this information, in whole or in part, to train or finetune a machine learning or artificial intelligence system.
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