For millions of Americans, tax season is more than a financial obligation. It’s become a real source of anxiety.
IRS data shows the agency issued more than 117 million refunds worth over $461 billion in 2024, making tax season one of the single largest annual wealth redistribution events in the country. And yet, recent consumer research suggests many Americans are relying on those refunds to cover everyday essentials, including groceries, rent, bills, and debt repayments.
New research commissioned by Sigma Tax Pro sheds light on how Americans are really feeling about tax season and the role refunds play in their financial stability.
Based on a nationally representative survey of 2,000 Americans, the findings reveal widespread anxiety over unexpected tax bills, difficulty saving after filing, and a heavy reliance on annual refunds to make ends meet. The research also uncovered persistent confusion around the filing process, as well as strong skepticism toward AI-powered tax tools and services.
Let’s take a closer look.
For many Americans, tax season is more than just paperwork. It’s a major source of pressure and financial uncertainty.
Nearly one in three Americans (32%) worry their savings won’t cover a tax bill, and 44% say they’d struggle to pay an unexpected bill of $1,000 or more. Thirty-five percent find it hard to save money after filing, a sign that taxes continue to impact households long after filing season is done.
The emotional toll is real, too. Almost a third of Americans (29%) say they feel stressed about their tax situation, and 25% say tax season takes a measurable hit on their mental health. What’s more, when refunds do arrive, for many households, they don’t go towards anything fun. Instead, 39% say most of their refund goes straight towards essentials like bills and groceries.
When some Americans receive their refund, they see it as a nice bonus. But for many, that isn’t the case. For millions across the country, tax refunds play a major role in household budgeting.
More than one third of Americans (35%) say their refund is one of the biggest financial boosts of the year, and 28% rely on it as a key source of income each spring. So much so, 30% say they’d rather receive a larger annual refund than see more money in their monthly paycheck, even if that means giving the government what is effectively an interest-free loan.
That said, not everyone is satisfied with how they spend their refund. More than one quarter (26%) say they’ve regretted how they spent a tax refund in the past.
Fortunately, not all Americans feel the same. 19% spend most of their refund on vacations, gifts, or personal treats, and 27% say they save or invest most of theirs.
Taxes are an annual reality for most adults in the U.S. However, understanding them is another matter entirely.
More than one in five Americans (21%) say they don’t understand the tax process, and only 45% say they do. Confidence in filing independently is even more divided. Just 38% say they would feel confident filing taxes without help, while 30% say they wouldn’t.
The fear of getting things wrong also runs deep. Almost a third (30%) believe they have missed deductions or credits they were eligible for. Another 25% worry they have made mistakes on their taxes, while 23% admit they have. Meanwhile, 27% worry about getting into trouble for filing incorrectly.
The survey also found that procrastination remains common, with 25% saying they usually wait until the last minute to file.
One particularly revealing finding shows that 22% of Americans believe a larger refund means they paid less tax overall, a fundamental misunderstanding that highlights just how far behind basic tax literacy remains.
Artificial intelligence is reshaping financial services and, broadly speaking, many Americans remain hesitant about using it for preparing their taxes.
More than half of Americans (55%) say they trust a human tax professional more than AI to prepare their tax return. 41% say they would not trust AI to help prepare their taxes at all, and just 24% say they would trust AI to assist them.
The findings suggest that while AI technology is getting better every day, when it comes to high-stakes situations like tax preparation, Americans still want a human in the room.
The gig economy, freelance work, and multiple income streams are changing how Americans earn, and making tax season more complicated in the process.
More than one quarter of Americans (28%) have more than one source of income, yet the confidence to report it correctly isn’t always there. While 53% say they’re confident they accurately report all their income, 22% find it confusing to report additional income, and another 22% aren’t even sure what qualifies as taxable.
Around 17% worry they may have failed to report income in the past. And tax complexity itself may be putting a ceiling on ambition: one in five Americans (20%) say it discourages them from trying to earn more.
Despite that, optimism is steadfast. 21% of Americans believe it’s possible for someone like them to earn $1 million through multiple income streams, even though just 22% think the current tax system fairly treats people who earn that way.
The picture that emerges from this data isn’t just about numbers. It’s about a system that millions of Americans find stressful, confusing, and, in many cases, actively working against them.
From refund dependency and filing anxiety to side-hustle confusion and AI skepticism, the throughline is consistent: Americans want help they can trust, and they’re not finding it in algorithms.
Human expertise and a genuine understanding of individual financial situations remain the gold standard, and the gap between where taxpayers are and where they feel confident is still very broad.
This report is based on a nationally representative survey of 2,000 American adults, conducted on behalf of Sigma Tax Pro. The research explored attitudes toward taxes, tax refunds, financial stress, filing confidence, AI-assisted tax preparation, and reporting income from side hustles and multiple income streams.
