Bills, refunds, and filing: New report reveals the changing behaviors and priorities shaping this year’s tax season

As the federal income tax filing deadline approaches, consumer caution notably increases, particularly among younger generations. American taxpayers are also getting smarter about refunds — using extra cash to boost financial stability and leveraging digital platforms to file their returns and get their refunds faster.

With more than 20 years of experience supporting the billing and payment needs of federal, state, and local governments, ACI Worldwide has a unique vantage point on consumers’ financial behaviors. ACI is one of two IRS-approved direct pay service providers, capable of tracking and analyzing national trends.

Americans are adjusting their financial strategies in response to economic challenges this year. There is a definite shift in priorities, with consumers becoming more focused than ever on paying down debt and saving and investing for the future.

These observations are backed by our latest 2025 ACI Worldwide YouGov Tax Trend Report, which reveals three distinct behaviors:

1. Tax refunds aren’t just for splurging anymore.
   For a significant portion of taxpayers, tax refunds are no longer seen as a windfall to be spent on luxury items or non-essential purchases. 39% of survey respondents reported plans to allocate their refund toward paying down existing debt, with an additional 44% opting to save the money.¹
2. Debt reduction is a priority amid high inflation.
   The persistent pressures of high interest rates are compelling consumers to prioritize debt reduction. This change in attitude is especially prevalent among Millennials, many of whom carry the weight of student loans and credit card debt. Our survey showed that 47% of Millennial respondents plan to use their tax refunds for debt repayment. The average refund in 2024 was $3,138. While modest in the context of rising living costs, for many it’s enough to stabilize their finances.²
3. Attitudes and priorities vary by generation.
   Those less burdened by long-term debt, like Gen Z, are more inclined to invest surplus cash in assets such as stocks, bonds, or cryptocurrency. More than a quarter (26%) of Gen Z respondents plan to invest their tax refunds, compared to 20% of Millennials, 10% of Gen X, and only 5% of Baby Boomers.¹ This underscores a generational divide in financial priorities, with older consumers more focused on savings and younger generations exploring investment opportunities, possibly as a means of hedging against the economic volatility they are inheriting.

Across the board, this shows that consumers are being much more cautious in what they do with their money and are looking to make more sensible budgeting decisions based on their circumstances.

As we gear up for this year’s tax filings, the resilience of digital channels has never been more crucial. With speed and convenience at the forefront, taxpayers turn to online platforms and mobile apps to manage their tax obligations efficiently.

As the longest-tenured service provider for the IRS, we’ve processed more than $25 billion in IRS tax payments. In recent years, we’ve added popular alternative payment methods such as PayPal, PayPal Credit, and Venmo to our IRS bill-paying options. More digital payment choices and the widespread adoption of mobile banking have accelerated the move away from traditional paper-based transactions.

According to our 2025 ACI Worldwide YouGov Tax Trend Report, one in four consumers (26%) now prefer using mobile devices for bill payments, a significant increase from just 11% in 2019. Most respondents (78%) receive their tax refund via direct deposit. This holistic shift in payment preferences demonstrates a decisive move toward digital methods across all age groups.

A small proportion (15%) of individuals prefer to mail paper checks to settle their tax obligations, although this figure is decreasing.¹

In 2024, 39% of consumers filed their taxes electronically, and only 11% of survey respondents expressed a preference for paper returns. Interestingly, this statistic is most prevalent among Millennials and Gen Z. While digital methods are preferred for convenience, manual processes continue to hold some appeal for individuals with straightforward financial circumstances or who seek the reassurance of physically mailing their returns or payments.

These findings are relevant not only for taxes but also for any businesses with high-volume billing and refund functions. They underscore the broad cultural and digital transformation as Americans embrace digital platforms to manage important finances. They also highlight that there is still some argument for offering non-digital options to ensure accessibility and inclusion for all.

Consumer awareness of tax-related scams remains a growing concern. The IRS has warned taxpayers to be vigilant against schemes that capitalize on the complexities of tax filing and the urgency to meet deadlines. While 64% of respondents report no experience with tax-related scams, more than one-third (36%) indicate that phone and email fraud has become a common attack.¹

Despite two in three respondents being aware of common scams, such as phishing (62%) and identity theft (64%), many remain vulnerable to less-publicized threats, such as fraudulent tax preparers.¹

This highlights the importance of continued consumer education to protect individuals from falling prey to fraudsters during tax season. Using tactics like unsolicited emails, text messages, and phone calls is critical.

For consumers, it’s worth reinforcing that the IRS does not initiate contact via these channels, and legitimate communication will never involve threats or demands for immediate payment. Moreover, taxpayers should always verify the credentials of tax preparers before enlisting their services, ensuring they are reputable and properly certified.

There is no doubt that current economic challenges are significantly altering consumer behavior. Taxpayer trends reflect similar changes observed in other financial services and billing industries.

As high inflation and interest rates drive financial stress, Americans search for opportunities to reduce debt and boost savings over discretionary spending. At the same time, a generational divide is emerging in investment preferences, with younger consumers more inclined to explore opportunities to build wealth.

Underpinning all of this is the continued shift toward digital-first interactions and the need for heightened consumer education to mitigate the risks of scams as they navigate new online ecosystems.

Being smarter, faster, and more aware of risk when it comes to bills and payments is not just for tax season — it’s essential for financial health all year round.