With tax season underway, many consumers are eagerly waiting for their tax refunds. How much will they get? The average tax refund disbursed so far this year for tax year 2024 is $3,453, according to the IRS’ most recent data, but that figure can change as more taxpayers file their 2024 taxes. With potentially thousands of dollars coming your way, it can be easy to get lulled into daydreams of using that money to splurge on not-quite-necessary expenses.

While spending your tax refund is tempting, investing it in a low-risk, high-rate account like a certificate of deposit (CD) can generate a return of at least 4%. CDs are a great option for new and seasoned savers because they’re an easy product to understand and offer a guaranteed rate of return. So, if you’re ready to save your refund instead of spend it, it helps to first know how much the average tax refund can earn in a CD.

See how much you could earn with a top CD here now.

How much can the average tax refund earn in a CD?

Calculating how much the average tax refund can earn from a CD is a matter of annual percentage yield (APY). APY is a percentage-based figure that uses compounding interest to grow your deposit. Every time your account compounds — often monthly or quarterly — you’ll earn interest on your principal and the interest your account has accumulated. 

Knowing that, here’s how much this year’s average tax refund so far, $3,453, can earn from five CD terms at today’s top rates: 

• 3-month CD at 4.35%: $36.95 for a total of $3,489.95
• 6-month CD at 4.45%: $75.99 for a total of $3,528.99
• 1-year CD at 4.40%: $151.93 for a total of $3,604.93
• 18-month CD at 4.16%: $217.69 for a total of $3,670.69
• 2-year CD at 4.15%: $292.55 for a total of $3,745.55

The returns you see above assume that you won’t make any early withdrawals from your CD. If you do, some accounts will charge you an early withdrawal penalty often equal to a certain number of months worth of interest. Some banks and credit unions offer no-penalty CDs, but keep in mind that you might receive a lower APY in exchange for withdrawing money penalty-free.

Find the top rates for your next CD here. 

How to boost your CD returns

There are several ways you can boost the interest your CD earns:

Deposit more than your full refund

If you’re looking to earn more interest than what your tax refund would generate in a CD, consider depositing more than just your refund. For example, if you deposit double this year’s average tax refund (so far) into a 1-year CD — $6,906 — you could earn $303.86 for a total of $7,209.86 at maturity. 

Shop around for the best rate

Taking the time to research all your CD rate options will give you a good sense of what the top rates are for the CD term you want. If you automatically choose to get a CD from a bank or a credit union you already do business with because you’re more familiar with them, you could be losing out on a much better interest rate.

Consider an online bank

Online banks tend to offer the best rates for CDs. For example, today’s top rate for a 6-month CD  — 4.45% — is issued by an online bank. Additionally, using an online bank means you can set up your CD without needing to go to a bank branch or speak with a customer service representative, making the process efficient and easy.

The bottom line

The average tax refund can earn anywhere from $36.95 to $292.55 from various CD terms of six months to two years. Short-term accounts tend to offer the highest APYs, while long-term CDs have greater interest-earning potential. Before you put your tax refund in a CD, be sure you know your account’s withdrawal rules. Some CDs levy a penalty against you if withdraw money before your CD matures, making them the best fit for those who won’t need their deposit amount while it’s saved.