Key takeaways:

• A tax refund isn’t extra money — it’s funds you overpaid to the Canada Revenue Agency (CRA), so consider how to make that money work for you
• New TD survey results suggest more Canadians surveyed plan to save, pay down debt, or invest their refund in 2026 compared to 2025
• Gen Z stands out: One in three polled plan to invest their tax refund, and even small, regular amounts (like $25 per month) can be a way to get started
• If investing isn’t right for your tax refund, you've got some possible options: build an emergency fund, pay down high-interest debt, make an extra mortgage payment, or maybe budget for a sweet treat

Getting an income tax refund may feel like getting a gift or bonus on top of your regular salary. But a tax refund isn’t actually extra income.

If you received a tax refund from the Canadian Revenue Agency (CRA), it means you overpaid your income taxes throughout the year, and you’re now getting that money back.

What you do with that money — book a ski trip, pay a credit card bill, or invest in the stock market — is up to you.

Forty-one per cent of Canadians surveyed expecting to receive a tax refund in 2026 say they’ll use those funds differently than they normally would because of economic conditions, according to results from a new TD survey.

Nearly half plan to save their refund, an increase from the 29% of respondents who said the same thing in 2025. More than a third say they’ll use it to pay down debt, compared to 23% last year.

A quarter of Canadians polled say they intend to invest their refund, a 10-point increase from the previous year.

1 in 3 Gen Z plan to invest their tax refund: survey

Compared to other generations surveyed, Gen Z is leading the way with their plans to invest their tax refund, said Manish Jain, Vice President, Saving and Investing, at TD.

“One in three Gen Z polled who will receive a refund are planning to invest it, which is far above the national average and a huge jump from last year,” he said.

“I think it shows they are really taking their financial future in their own hands and they know you don’t need a lot of funds to invest. You can start small. You don’t need to wait for a large lump sum.”

While it’s encouraging to see some Gen Z planning to invest their tax refunds, Jain said there’s work to be done to help both Gen Z and Millennials better understand the basics of registered accounts like the Tax-Free Savings Account (TFSA), the Registered Retirement Savings Account (RRSP), and the First Home Savings Account (FHSA).

In the survey, 64% of Gen Z and 42% of Millennials polled say they aren’t knowledgeable about registered accounts.

Fifty-six per cent of Gen Z and 30% of Millennials without registered accounts say clear, simple explanations would make them more likely to use one.

Anyone not sure about the differences between the registered accounts, and how they can be used, could consider seeking out a TD Personal Banker for advice, Jain said.

“Talking to someone with expertise can definitely help you understand the right product that reflects your goals and your circumstances," he said.

Investing is the right path for some Canadians who receive a tax return, but it’s not the only choice. Check out these other ways that you may want to consider for your tax refund:

Pay down high-interest debt like a credit card

If you're carrying a balance on your credit card or line of credit, or if you've got student loans or car loans, using your tax refund to pay down the balance could help you pay off these debts faster.

To get started, the Financial Consumer Agency of Canada (FCAC) recommends prioritizing your debts so you can develop a strategy towards paying them off.

One strategy is the "debt avalanche" method, which involves paying off high-interest rate debt first, such as credit cards or payday loans.

But that doesn't mean you ignore any additional debts on your plate — you should still make at least the minimum monthly payments for all of your other debts, while funneling any extra money (such as your tax refund) toward paying off the debt with the highest interest rate.

Even if your tax refund isn't enough to clear your entire debt load, you can still shrink the amount you owe. This approach can help reduce the overall amount of interest you'll pay over the life of the debt.

Make a lump-sum mortgage payment

If your mortgage contract allows it, using your tax refund to make an extra mortgage payment could help speed up your journey to being mortgage-free. Making prepayments could result in you paying less interest over the entire mortgage period.

But first, it's important to find out whether your mortgage is open or closed to prepayment. For example, an open prepayment mortgage allows homeowners to prepay any amount of their outstanding balance at any time without prepayment charges (some administration fees may apply).

On the other hand, closed to prepayment mortgages could still give you the option to make a maximum lump-sum payment each year.

If you have a TD mortgage, the TD Mortgage Prepayment Calculator may be able to help you estimate your prepayment charge so you can understand the costs.

Build up your emergency fund or other savings

Whether your tax refund is $100 or $1,000, using the money to start a savings account, or to increase your existing savings, can help give you a head start towards securing your financial goals. It doesn't matter what those goals are — a tax refund can be used for short or long-term goals.

These savings goals will be different for everyone. For some, it could be longer-term goals such as retirement or a down payment on a home, while for others, it may be shorter-term goals such as a wedding, a new car, travel, or home renovations.

If you don't have an emergency savings fund, creating one with your tax refund is an idea worth considering. Having an emergency savings fund that you can turn to in case unexpected expenses arise can help reduce your stress if an emergency should arise.

You can start with as little as $20 each month. You may be surprised how quickly this consistent amount can add up over time.

Purchase something for yourself with your tax refund

If your finances are in good shape, there's nothing wrong with spending your tax refund on something for you. You could enroll in training, certification, or a professional development course to learn new skills or pivot to a new industry.

Or you might consider using your tax refund to pay for a gym membership to improve your overall fitness or purchase a wellness tracker to set and achieve personal fitness goals. You could also consider a weekend spa getaway, a day trip to a town you've always wanted to visit, or even a special night at the theatre with friends.

Whatever you decide, you should be comfortable that treating yourself fits in with your overall budget and how much you want to allocate to your financial goals.

About the survey

This TD survey, conducted using the Leger Opinion panel, ran from March 26 to March 30, 2026, with a nationally representative sample of 1,521 Canadian adults; results were weighted by age, gender and region to match the population, according to Census data. For comparison purposes, a probability sample of 1,500 has an estimated margin of error of ±2.5%, 19 times out of 20.