Financial strain is persistent across the United States, and the annual tax season—and refunds that come with it—aren’t likely to provide much relief. Roughly two-thirds of American consumers continue to live paycheck to paycheck in early 2026, with little sustained improvement. Within this group, roughly 40%–45% report comfortably paying their monthly bills, while 20%–25% consistently struggle, indicating that a large share of households have little financial slack amid inflation, higher living costs and tariffs. At the same time, the composition of paycheck-to-paycheck living has shifted. Over time, people living this way due to financial necessity have overtaken those living paycheck to paycheck by choice, suggesting that economic pressure—rather than lifestyle preferences—is increasingly driving financial vulnerability.
In theory, tax refunds and one-time government payments could play outsized roles in bolstering household budgets. But paycheck-to-paycheck consumers, especially those struggling to pay bills, are less likely to receive refunds. When they do, they overwhelmingly use the money to cover everyday expenses or repay debt. By contrast, financially stable consumers receive tax refunds more consistently and are far more likely to save or invest them, reinforcing existing gaps in financial resilience.
These are just some of the findings detailed in “Tax Refund Season Reveals the Reality of Paycheck-to-Paycheck America,” the newest installment of the PYMNTS Intelligence exclusive series New Reality Check: The Paycheck-to-Paycheck Report. This edition examines who receives tax refunds, how they use them and how preferences differ between tax refunds and one-time government payments—especially across paycheck-to-paycheck personas and financial lifestyles. It draws on insights from a survey of 2,432 U.S. adult consumers conducted from Jan. 15, 2026, to Jan. 29, 2026.
Paycheck-to-Paycheck Living
Roughly two-thirds of American consumers live paycheck to paycheck; one-quarter struggle to pay their monthly bills.
The share of consumers living paycheck to paycheck remained persistently high from early 2024 through early 2026, generally fluctuating between roughly 60% and 70%. After a brief dip in early 2024, the rate rose and stayed elevated through 2025, peaking at more than 70% before easing slightly in early 2026.
Approximately 40%–45% of consumers living this financial lifestyle report comfortably paying bills, while roughly 20%–25% consistently struggle to pay these monthly costs. Month-to-month variation exists, but there has been no sustained improvement, suggesting ongoing and entrenched financial pressure.
Over time, living paycheck to paycheck has become increasingly necessity-driven.
Living paycheck to paycheck occurs in several forms, and there is a clear shift within the population living this way between early 2024 and early 2026. Early in that period, consumers living this financial lifestyle by choice represent the largest share, hovering in the mid-to-high 30% range. But over time, this share trends downward, particularly through mid-to-late 2025, before stabilizing at lower levels.
In contrast, the share of people living paycheck to paycheck due to financial necessity has risen steadily, overtaking choice-driven consumers by mid-2025 and reaching its highest level last October. The share of consumers who toggle between the necessity and choice personas has fluctuated but has remained relatively stable overall. Together, these trends suggest that persistent financial pressure is increasingly pushing households into paycheck-to-paycheck living out of necessity rather than out of preference.
Tax Refunds and Financial Stability
Paycheck-to-paycheck consumers, especially those living that way out of necessity, are less likely to receive tax refunds than the average U.S. consumer.
About 56% of respondents received a refund in the last filing season, either a federal refund alone or one combined with a state refund.
The greater your income and financial stability, the more likely you are to get a refund. Consumers who don’t live paycheck to paycheck, along with those in middle- and higher-income tax brackets, are the most likely to receive refunds. Married households with children are also more likely to receive refunds due to the role of tax credits.
In contrast, financially constrained consumers are less likely to receive refunds. Paycheck-to-paycheck households, especially those struggling to pay bills or those living this financial lifestyle out of necessity, are more likely to receive no refund. Lower-income and unmarried households without children show similar patterns.
Most paycheck-to-paycheck consumers struggling with bills use their tax refunds to pay bills or debt, while financially stable consumers mainly save.
Among the 56% of respondents who received a refund last tax season, their priority was clear: financial maintenance over discretionary spending. This trend is expected to persist, as planned uses for future refunds closely mirror past behaviors.
Those living paycheck to paycheck out of necessity or struggling to pay bills primarily allocate any refunds to immediate expenses or debt repayment. For these vulnerable consumers, a refund functions as short-term financial support. In contrast, those not living paycheck to paycheck are significantly more likely to funnel their refunds into savings or investments, strengthening their financial position.
What’s more, anticipated tax refunds are usually mentally allocated in ways that reflect underlying financial constraints, even before any funds are received.
One-Time Government Payments and Household Responses
Financial lifestyle plays an important role in how consumers use their tax refunds.
Paycheck-to-paycheck consumers—especially those struggling to pay bills—use one-time government payouts like tax refunds or pandemic-style stimulus checks mainly to ease their immediate financial pressures. Among consumers living this financial lifestyle and struggling to pay bills, roughly 40% would spend the funds on everyday expenses, and another 27% on debt repayment, meaning roughly two-thirds would direct the money to short-term obligations. Only around 16% would save or invest, and relatively few would use a one-off Treasury check to indulge in discretionary spending.
Paycheck-to-paycheck consumers who comfortably pay their bills or live that way by choice have slightly more flexibility. Roughly 45%–50% of individuals in these groups would allocate a refund or one-time government payment to bills or debt, while about 25%–30% would save or invest, indicating limited capacity to treat the funds as “extra” money. In contrast, consumers who do not live paycheck to paycheck respond very differently.
A majority—about 53%—would save or invest the funds. Only about 22% would use the money for bills or debt, underscoring how one-time payments primarily function as financial relief for consumers living paycheck to paycheck.
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Methodology
“Tax Refund Season Reveals the Reality of Paycheck-to-Paycheck America,” the newest installment of New Reality Check: The Paycheck-to-Paycheck Report, a PYMNTS Intelligence exclusive series, is based on a survey of 2,432 U.S. adult consumers conducted from Jan. 15, 2026, to Jan. 29, 2026. The report examines who receives tax refunds, how they are used and how preferences differ between tax refunds and one-time government payments—specifically across paycheck-to-paycheck personas and financial lifestyles. All findings are descriptive and reflect self-reported behavior; results describe associations rather than causal relationships. Our sample was balanced to match the U.S. adult population by age, gender, education and income.
