It is April, and some people may already be waiting for an early tax refund check from the IRS, a sales commission payout, or an annual bonus from their work in 2024. Maybe they have already received this annual boost to their income, and they are wondering what to use it for.
An expected refund, commission or bonus can inspire exciting plans for spending our new money. It’s natural to want to reward ourselves using part or all of a tax refund or bonus, which we may think of as extra money that’s different from our regular pay. Keep in mind that tax refunds are money that you have already earned. Whether it is your regular pay or a refund, commission, or bonus, you should be still be responsible and thoughtful with how you use that money.
A 2025 National Retail Federation® survey found that approximately 49 percent of those surveyed planned to use this year’s tax refund to contribute to savings, while the next highest percentage, 33 percent, were going to use the refund to pay down debt. The third highest group of survey respondents, 28 percent, intended to use their refund for “everyday expenses.” These survey results are great news, because the smartest thing you can do with any extra income is use it for necessities, including increasing your savings and decreasing your debt. That’s why we’re offering a few recommendations to the question, “What should you do with your 2024 tax refund, commission or bonus money?"
So…what can you do with your 2024 tax refund, commission or bonus money other than spending it now?
Here are a few ideas to consider:
Pay your regular bills. It may be that the best thing you can do with any additional money is to stay current with your regular financial obligations, pay bills and pay down any additional debt you may have accumulated.
Add more to your savings or money market accounts—or save in a certificate of deposit. It's always a good idea to add to your savings. For many people, they start building their financial resources with a basic savings account. Saving accounts earn interest and can be linked to include direct deposit of a paycheck or to a checking account.
If you want to have a flexible account that can earn a higher rate of interest for your savings, look at a money market account. These accounts don't lock you into a fixed interest rate or long-term commitment. Often with these accounts, if you maintain a certain balance, you will earn dividends at a higher rate than a savings account.
A certificate of deposit (CD) is another way for you to watch your money grow, usually at a higher interest rate than a savings account. It is similar to a savings account in that it helps you grow your money, but CDs are a time-based deposit for a specific period. When you buy a CD, the money is held in the certificate for a fixed amount of time (fixed-term) and can be used once the certificate of deposit has matured—when the fixed-term is complete. CDs can typically be obtained for time periods of 6, 12, 24, 36 or 60 months. Delta Community’s interest rates on its CDs are competitive and worth a look!
Consider putting more money in an IRA or other retirement savings account. The additional funds you receive now can make a big difference in the future. If you use them to make an extra contribution to your Roth IRA or a traditional Individual Retirement Account (IRA) they could significantly increase by the time you retire. If you don't already have an IRA, you can use your refund/commission/bonus to jump-start one. According the U.S. government agency the Internal Revenue Service (IRS), the maximum IRA annual contribution limit in 2025 is $7,000.
Make your Health Savings Account healthier. A health savings account (HSA) allows you to save money for expected healthcare expenses, and it also offers tax advantages. According to the IRS, maximum HSA contribution amounts for 2025 are $4,300 for yourself and $8,550 for families. Money saved in an HSA reduces your taxable income, which can add up to significant savings. Money taken out of your HSA for qualified medical expenses is tax-free and, similar to a 401(k) retirement account, the HSA is yours to keep.
Start to build—or rebuild—a short-term emergency fund. Finance professionals typically recommend saving the equivalent of three to six months' worth of living expenses in a separate emergency fund to offset an unexpected job loss, medical emergency or other financial setback. As the recent pandemic unfortunately demonstrated, for many Americans it can be difficult to ever start, let alone maintain, an adequate short-term emergency fund. That's why using your tax refund, commission or bonus payout to start or build up your savings is something you will be thankful for when you need it
Pay off high-interest debt, such as credit card bills. If you have accumulated credit card debt from last year’s holiday season, one of the best ways to spend your tax refund is to eliminate credit card charge balances and other types of high-interest debt. Reducing high-cost debt not only relieves the stress of making monthly payments; it also enables you to save hundreds, or even thousands, of dollars over time. Even paying down part of your credit debt will help save money. Another option for cutting your debt is to take out a personal loan, or home equity line of credit, and use the loan to pay off other debt that has a higher interest rate—and then you could have more money available to pay off the new, lower-interest loan faster.
Think about adding to current investments or consider starting new investments. You may want to add this extra money to existing investments, or, if you do not currently have investments, consider if now is a good time to begin researching and planning your investing journey. If you're interested in learning more about managing money, check out Delta Community’s nationally award-winning Financial Education Center to see a list of free financial education workshops; for details please visit the Events page on our website.
Help others with a charitable donation. If you're in a strong financial position, consider if you might want to help others with that additional money you’ve received. Perhaps you can assist a family member or a friend in need or support a charitable organization. If the organization is tax-exempt under section 501(c)(3) of the of the IRS Internal Revenue Code then your contribution may betax deductible—so you are helping others and helping yourself by lowering your 2024 taxes. It is a good idea to research and confirm the tax status of any organization that you are considering for a donation.
Do something good for yourself—because you deserve it. If you eliminate high-interest debt and fully fund your savings and emergency accounts, you may want to indulge just a bit in a smaller, personal reward to thank yourself for your disciplined money management. Consider treating yourself, but not extravagantly—give yourself a nice takeout meal from a restaurant, some new clothes, rent a movie from a streaming service, buy music, a book, or videogame, go to a concert, or do something else that you would enjoy.
A little more information on getting a federal tax refund
For tax refunds, the IRS also provides a free direct deposit option for savings accounts, allowing you to deposit your refund in up to three accounts in any U.S. financial institution, including savings and checking accounts. You can even direct your refund money toward the purchase of up to $5,000 in U.S. government savings bonds.
Looking for more free money advice throughout 2025?
For more information that may help you manage your costs and finances, look into the free Delta Community Financial Education Center webinars on a range of practical, “how to” financial topics. Please visit the Financial Education Center's Events & Seminars page to review and register for its on-demand webinars.
The Credit Union’s blog has more information that could be educational and helpful:
You might achieve more BALANCE™ in your finances with free advice from a national non-profit organization
BALANCE™ is a financial education and counseling organization that offers free services to Delta Community members. Some of its services include credit report reviews, debt management, and information on budgeting, money management and home buying.
Visit the BALANCE™ website to learn about their education and assistance programs. Members can also speak with certified credit and housing counselors to get personalized guidance.
Want to connect with a Financial Coach about your specific situation? Chat online, e-mail, or call 1-888-456-2227 to speak with a Financial Coach today.
Note that the services offered through BALANCE™ are separate and distinct from any business conducted with Delta Community and are not guaranteed by, nor are they obligations of, the Credit Union.
