How to Turn Your Tax Refund Into $250 a Month All Year Long

In a typical year, over 100 million U.S. tax filers receive a refund—and the average amount is more than $3,000. But while a big tax refund can feel like a windfall, there could be a better way to manage your finances. By adjusting your tax withholding throughout the year, you may be able to add $250 or more to your monthly budget. 

Making changes now doesn’t affect your 2025 tax filing, so don’t worry about giving up any upcoming tax refund you’re banking on. But making this adjustment means you can increase the flexibility of your budget by maximizing your incoming pay throughout 2026.

Why a Big Tax Refund Feels So Good—and What You Might Be Missing

It’s understandable why people love tax refunds. It basically feels like getting a big bonus just for filing your tax return. 

Plus, many people view tax refunds as forced savings. Instead of being tempted to spend the money throughout the year, the government gives you a big check back that you can use to tackle big goals, like paying down debt or booking a vacation.

Still, reframing how you think about this money could help you accomplish more of your goals, and do it faster. You can still get the satisfaction of receiving extra money, but that can happen one or two times every month instead of just once a year. 

You can even set these extra payments up so they still result in forced savings. One approach is to set up a monthly automatic transfer of $250 (or whatever your extra paycheck amount turns out to be) to a separate high-yield savings account. That can reduce your temptation to touch that money.

What an Extra $250 a Month Could Actually Change

In 2025, the average tax refund was $3,167. Dividing that number by 12 means the typical refund recipient could have received nearly $264 more per month in take-home pay instead of waiting for a big pay-out next spring. Or, if you’re paid every two weeks, you could divide that average tax refund by 26, which would result in almost $122 more per paycheck.

Of course, your individual tax situation may look different. But you can similarly divide your last tax refund by the number of paychecks you get per year to get a sense of how much more you might keep.

Making this change does mean giving up the big tax season bonus you may be used to, but the advantages of receiving a higher paycheck throughout the year can be even greater. This extra money can help you:

• Reduce the stress of paying bills on time
• Cover rising grocery bills or household essentials without using credit
• Avoid late fees or credit card interest
• Build or grow an emergency fund
• Earn interest all year by parking the money in a high-yield savings account (you can easily earn 4%–5% APY as of February 2026)
• Make a big purchase sooner without incurring debt
• Increase retirement contributions or invest in a brokerage account

The common thread is timing: getting more of your money sooner means you can use it when expenses hit—or put it to work earning interest right away.

How to Adjust Your Withholding (Without Locking Yourself In)

Changing your tax withholding may sound complicated, but for most people it’s a quick update. And it’s not a permanent commitment. In most cases, it simply requires submitting a new IRS Form W-4 to your employer, something you can do at any time and for any reason.

When you do this and it’s processed, the changes will begin with your next paycheck. So the sooner you make the change, the sooner you’ll start seeing a larger paycheck.

To figure out what to adjust, you can use the Tax Withholding Estimator on the IRS’s website. Or, you might be able to make some simple adjustments by following the instructions on Form W-4, like adding that you have a dependent child if you never updated the form after having a baby.

Your HR department can also likely help if you have any questions, and there’s plenty of information online about how to fill out these forms if you get stuck.

Note, however, that these changes only apply to your federal taxes. If you keep getting a big state tax refund, you might need to adjust a state-specific form as well. These go by different names in different states, such as form DE 4 in California and form IT-2104 in New York. A few states, however, follow your federal W-4, so you might only need to change that.

For many people, getting more money throughout the year can make a real difference—like avoiding credit card balances or earning more interest on a higher savings balance. That’s why, for a lot of households, adjusting tax withholding is often worth it.