I’m going to take a wild guess and say you probably don’t enjoy filing your taxes. But for many, there’s the silver lining of a refund check waiting at the end of it all. The average refund check as of Feb. 14, 2025 is $2,169 per month. That’s about a third less than what we saw last year at this time. However, fewer people have filed their returns so far, and there’s a lot of tax season left to go.

You may already have plans for what you’re going to do with your refund when you get it. You may want to pay down debt or treat yourself to a little something special. But you may want to consider investing that money instead. It means giving up access to those funds today, but you could wind up with a lot more in the future.

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Here’s how much the average tax refund could be worth by retirement

Investing your tax refund can help it grow much more quickly than it could if you kept that money in a savings account. How much you’ll wind up with in the end depends on several factors, including your investment return and the amount of time the money stays invested. The following table gives examples of how much a $2,169 tax refund could be worth after being invested for various amounts of time with several rates of return.

Source: Author’s personal calculations. Dollar amounts are rounded to the nearest dollar.

Obviously, you can’t be sure of your investment rate of return. But you probably have a rough idea of how long you have until retirement, so you should be able to get a ballpark estimate of how much that single tax refund could be worth by the time you quit the workforce.

Unless you plan to retire within the next few years, investing the average tax refund would likely be enough to cover several months of living expenses in retirement. For the youngest workers today, it could even be enough to pay for a year or more of expenses.

Keep in mind that you could wind up with even more than what’s shown in the table above if your tax refund is higher than average. However, this assumes you invest the entire thing, which may not appeal to you.

Is investing your tax refund the right move for you?

Investing your tax refund could be a wise move if you don’t plan to spend any of that money in the near future and you don’t have high-interest debt. Those with credit card or payday loan debt might be better served by using their refund to pay these debts off. Otherwise, they could pay more in interest over time than they earn on their investments.

If you plan to invest your tax refund in an IRA, you’ll also have to stay mindful of the contribution limits. You’re allowed to set aside up to $7,000 in an IRA in 2025 if you’re under 50, or $8,000 if you’re 50 or older. Most people probably won’t have reached this limit so early in the year. But if you made a big contribution in January, this may not be an option for you.

It’s also fine to invest just a portion of your tax refund if you’re not comfortable investing the whole thing. You can always spend the remainder on something you want, or keep it in a high-yield savings account so you have it when you need it.

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