A new income tax survey from ACI Worldwide , an original innovator in global payments technology, developed in partnership with YouGov, shows that nearly 40% of taxpayers would use their tax refund to pay debt (e.g., credit cards, loans, etc.), suggesting that the inflationary economy is eroding disposable income as Americans turn to tax refunds for debt relief. The survey also reveals that 44% of respondents chose to save their tax refunds, signaling a growing sense of financial caution and declining economic optimism.

This year’s survey also highlights an uptick in digital payment methods, with 65% of respondents preferring to pay digitally and paper-based checks declining year-over-year (YoY) to only 15%, largely contributed by Baby Boomers and Gen X. Alternative payment methods such as PayPal, GooglePay and ApplePay continue to be favored by Gen Z compared to all other age demographics. The survey shows a similar trend when it comes to receiving tax refunds, with 80% of respondents preferring refunds to be deposited electronically.

"As we enter the tax season, many Americans are looking to maximize their tax refunds and make smart financial decisions, whether it's paying off high-interest debt or building up their savings. This year’s findings show that taxpayers are continuing to pivot to digital payment channels to pay taxes and receive their refunds quickly. ACI’s digital payment solutions empower Americans to meet their tax obligations in a fast and secure manner and take control of their finances,” said Ron Shultz, General Manager of ACI Speedpay.

Additionally, this year’s survey shows lower awareness of common payment fraud schemes during tax season particularly among Gen Z respondents, underscoring the importance of consumer education as a vital defense tool against fraud. Among consumers who have experienced scams, one-third were phone and email scams involving fraudsters impersonating the IRS. The survey also shows a 3% jump in victims of identity theft, where a bad actor uses someone else's personal information to commit fraudulent activities.

"Tax season is a prime opportunity for scammers to target consumers who feel overwhelmed by the complexities and time pressures of filing. By using secure digital payment channels with robust verification capabilities, taxpayers can safeguard their financial information and ensure that their refunds and payments are handled safely and efficiently,” added Shultz.

For over 20 years, ACI has supported the billing and payment needs of federal, state and local government entities with secure, Payment Card Industry-compliant solutions. ACI is one of two approved IRS service providers and one of the platforms taxpayers can use for IRS DirectPay. In recent years, ACI has added popular alternative payment methods such as PayPal, PayPal Credit and Venmo. ACI is the longest-tenured service provider for the IRS and has processed more than $25 billion in IRS tax payments.