How Much Richer Could You Be Without a Big Tax Refund?

A big tax refund isn’t a reason to celebrate if you overpaid throughout the year. Your interest-free loan to the government could have cost you.

US currency in Uncle Sam's hat for taxes
(Image credit: Getty Images)

Many people rejoice each year when they receive their tax refund, but high refund amounts could mean that you overpaid your taxes throughout the year. And if that’s the case, you’ve essentially lent the government money, completely interest-free. 

While no one wants a high-income tax bill, owing the IRS just a little could put more money in your pocket. Here’s how much richer you could be if you kept your money throughout the year instead of receiving it back as a tax refund.

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Row 0 - Cell 0 Deposit $265 per monthDeposit $3,182 per yearDifference
End of Year 1 (5.5%)$3,261$3,182$79
End of Year 2 (4.6%)$6,662$6,514$148
End of Year 3 (2.5%)$10,047$9,861$186
Swipe to scroll horizontally
Row 0 - Cell 0 Invest $265 monthlyInvest $3,182 annuallyDifference
Year 5$18,413.73$17,937.23$486.50
Year 10$43,055.46$41,941.29$1,114.17
Year 15$76,031.65$74,064.14$1,967.51
Year 20$120,161.24$117,051.75$3,109.49
Year 25 $179,216.57$174,578.88$4,637.69

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Katelyn Washington
Former Tax Writer

Katelyn has more than 6 years of experience working in tax and finance. While she specialized in tax content while working at Kiplinger from 2023 to 2024, Katelyn has also written for digital publications on topics including insurance, retirement, and financial planning and had financial advice commissioned by national print publications. She believes knowledge is the key to success and enjoys providing content that educates and informs.