I’m a Financial Advisor: The No. 1 Thing Middle-Class Americans Should Do With Their Tax Refund

Group 1 - Middle-class Americans are expected to receive larger tax refunds this year due to the IRS not updating federal income tax withholding tables, with an anticipated increase of 15% to 20% in average refunds [1] - The financial advisor suggests that individuals should consider investing their tax refunds in personal development, such as paying down high-interest debt, building an emergency fund, or contributing to retirement accounts [3][4] - The additional 15% to 20% in tax refunds translates to a few extra hundred dollars for middle-class families, which, while helpful, is not considered life-changing [4] Group 2 - A tax refund is essentially a return of the taxpayer's own money that was withheld throughout the year, and it is not considered extra income [5] - Financial advisors recommend adjusting tax withholding to minimize refunds, allowing individuals to have more disposable income throughout the year for investment or savings [5]