If you’re looking forward to a refund in 2026, think carefully about how you’ll spend it. Updating your wardrobe or going on a tropical getaway may be fun ways to spend your extra cash, but doing so may mean missing an opportunity to improve your overall financial situation. Instead, you may want to consider some other options to help you get ahead.
Boost your retirement savings. If you receive a big refund come tax time, why not decrease your tax withholding so that you can increase your savings in the Hewlett Packard Enterprise 401(k) Plan? The Hewlett Packard Enterprise 401(k) Plan gives you the flexibility to make pre-tax 401(k) contributions (which reduce your taxable income today), Roth 401(k) contributions (which reduce your taxable income in retirement), and after-tax 401(k) contributions (which allow you to save beyond the annual IRS limit). Plus, Hewlett Packard Enterprise offers an annual match when you contribute to the Hewlett Packard Enterprise 401(k) Plan. Hewlett Packard Enterprise will match 100% of the first 4% of pay you contribute. (Note: Any matching contributions are made to your account at the end of each calendar quarter. Matching contributions are not made on after-tax contributions.) Contribute up to 50% of your annual eligible pay—through pre-tax and Roth contributions combined—up to the 2026 IRS limit of $24,500. If you’re on track to reach the limit, consider making after-tax contributions to save up to $66,000 in 2026. Or, you can open a separate IRA with your tax refund. In 2026, you can contribute a total of $7,000 to Traditional and Roth IRAs combined. Lastly, if you have taken a loan from the Hewlett Packard Enterprise 401(k) Plan, consider using your tax refund pay off your loan and get that money working for you again.
Cushion your emergency fund. Most experts recommend having an emergency fund with enough money to cover three to six months of living expenses. Why so much? Planning for a worst-case scenario helps you easily cover smaller emergencies—replacing the water heater, for example—throughout the year without dipping into your long-term savings. Consider using your tax refund to establish or cushion your emergency fund—you’ll be better prepared for the unexpected.
Cut your credit card debt. If you have credit card debt with a high interest rate, consider using your tax refund to reduce your balance. By doing so, you’ll reduce the amount of interest you pay each month and repay your debt more quickly—as long as you stop using the credit card!
Invest in education. For yourself or for your kids, education is a wise investment. Want to improve your Spanish, or learn to use a new software program? Your tax refund offers a way to finance your continuing education. If you have children, you may want to contribute your tax refund toward their college savings funds. To make the most of your investment, consider using a tax-advantaged account designed specifically for education, like a 529 plan.
Improve your home. Whether you plan to move within the next year or stay in your home for years to come, your tax refund can be used to fund projects that help you maximize your investment. Getting ready to sell? The first and last impressions of a home matter, so improve your outdoor appeal. Planning to stay? Making your home more energy efficient can help you save a bundle over time. Consider conducting a home energy audit, which may help you identify energy-saving measures like where to seal leaks and add insulation, or replacing old appliances with newer, more efficient models.
Buy a fuel-efficient car. Even though a car is usually a depreciating asset, using your tax refund to purchase a fuel-efficient car could be a smart move. By using your tax refund to boost your down payment, you may reduce the amount of your monthly payments and get a lower interest rate. Plus, a fuel-efficient car may help keep more money in your pocket at the pump.
Of course, how you spend your refund is up to you. Some Americans prefer to have more taxes withheld from their paychecks throughout the year as a way to save for a specific purpose, like a family vacation. But if you’re overpaying without a plan for your refund, consider using the money to brighten your financial future with one of these suggestions.
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Put your refund to work
Whether you’re saving, investing, or paying down debt, make the most of your tax refund to potentially strengthen your financial future.
