How to earn 4% on your tax refund now
While there's still plenty of time left to file your taxes before the April 15 deadline, over 43 million taxpayers have already filed and been issued their refunds this year — and, so far, they've received an average of $3,324 (as of March 7, 2025). If you're one of the many who's waiting for your tax refund to arrive, you may already have plans for that cash, but if putting your return into an interest-bearing account isn't on your list, you may want to consider adding it.
Right now, there are a few different interest-bearing account options that can help you earn at least 4% on your tax refund. While that decision may not be as appealing as spending the money on a trip or new kitchen appliances, depositing the funds from your tax refund into one of these accounts can offer a safe return at a time when economic uncertainty is looming and inflation is still higher than the Federal Reserve's 2% goal. Knowing which accounts to deposit your refund in, however, is key.
So what types of deposit accounts should you consider right now, and how much you could earn by depositing the average tax refund into these accounts?
See how much your tax return could earn today.
How to earn 4% on your tax refund now
Here are a few simple ways to earn at least 4% back on your tax refund right now.
Certificate of deposit
It's easy to find a certificate of deposit (CD) offering an annual percentage yield (APY) of at least 4% right now. While CD rates aren't as high as they were in recent years, they're still high enough to earn a solid return on your tax refund.
What makes a CD a smart way to earn 4% is that these accounts are simple to use: You deposit your money, earn interest at a fixed rate and withdraw your money at maturity. The minimum deposit requirements also tend to be relatively low for many CDs — with most requiring a $100 to $1,000 minimum deposit.
That said, many CDs require you to leave your deposit untouched to earn the maximum return. If you withdraw money before maturity, you'll generally have to pay an early withdrawal penalty in return. Most banks will only waive early withdrawal penalties in limited scenarios, meaning you likely won't be able to escape the penalty. No-penalty CDs are also an option — they have no early withdrawal penalties — but they tend to offer lower rates than CDs with penalties.
How much can you earn with a CD after one year?
If you deposited the average tax refund into a 1-year CD with a rate of 4.40%, one of today's top rates, you could earn $146.26 by maturity, for a total of $3,470.26.
High-yield savings account
Many high-yield savings accounts offer rates above 4% at the moment. And, in some cases, you may find rates that are higher than what CDs are offering right now. However, it's important to note that high-yield savings accounts come with a variable rate, which means your APY can increase or decrease each month depending on the wider rate environment and other factors.
So, while a high-yield savings account may offer a better rate than a CD today, that rate could drop later in the year if, for example, the Federal Reserve slashes its benchmark rate and that, in turn, impacts rates on these types of deposit accounts. Should inflation rise over the next few months, though, the Fed could raise rates, and high-yield savings account rates could go up.
One of the big benefits of putting your tax money in this type of account is that it doesn't have the same early withdrawal penalties that a CD would. Your bank may limit you to a certain number of withdrawals per month, but that's not always the case, and overall, high-yield savings accounts offer you more liquidity than the average CD does.
How much can you earn after one year?
If you deposited the average tax refund into a high-yield savings accounts with a rate of 4.75%, one of today's top savings rates, you could earn $157.89 in one year for a total of $3,481.89 (assuming that rates remain constant and you don't make any withdrawals or additional deposits).
Money market account
Money market accounts more closely resemble checking accounts than CDs and high-yield savings accounts do. They allow you to write checks and make deposits and withdrawals. So, in terms of liquidity, money market accounts tend to offer more flexibility than the other interest-bearing account options that offer 4% or more right now.
Money market accounts tend to have lower rates compared to high-yield savings accounts right now, but in some cases, these accounts offer higher rates than CDs. The rates on these accounts are also typically variable, which is important to keep in mind. If rates fall at some point, your money market rate will likely drop in tandem — but if they increase, the rate on your money market account is likely to rise, too.
How much can you earn after one year?
By depositing the average tax refund in a money market account with a rate of 4.46%, one of this month's top rates, you could earn $148.25 at the end of one year, for a total of $3,472.25 (assuming rates remain constant and you don't make any withdrawals or additional deposits).
The bottom line
If you've got a tax refund on the way, depositing that money into a CD, high-yield savings account or money market account can generate a hefty return on money you might otherwise spend. Before you decide where to put your tax refund, though, review your finances and determine whether you'll need access to those funds soon. If you're worried about financial emergencies, a high-yield savings account may be a better choice than a CD. Money market accounts offer the same flexibility but may have lower rates than high-yield savings accounts, so it's important to compare your options and find the right one for you.
