Do Tax-Time Savings Deposits Reduce Hardship Among Low-Income Filers? A Propensity Score Analysis

Publication Date



Objective: A lack of emergency savings renders low-income households vulnerable to material hardships resulting from unexpected expenses or loss of income. Having emergency savings helps these households respond to unexpected events, maintain consumption, and avoid high-cost credit products. Because many low-income households receive sizable federal tax refunds, tax time is an opportunity for these households to allocate a portion of refunds to savings. We hypothesized that low-income tax filers who deposit at least part of their tax refunds into a savings account will experience less material and health care hardship compared to non-depositors. Method: Using data from a household financial survey of a large-scale tax-time savings initiative, we examined the effects of saving tax refunds on material and health care hardship outcomes 6 months after filing taxes among a sample of low-income filers (n = 7,537). We used propensity score analysis to adjust for self-selection bias. Results: Six months after filing taxes, depositors have statistically significant better outcomes than non-depositors for five of six hardship outcomes. Also, Black filers have statistically significant worse outcomes than White filers for half of hardship indicators. Conclusions: Findings affirm the importance of saving refunds at tax time as a way to lower the likelihood of experiencing various hardships. Findings concerning race suggest that Black households face greater hardship risks than White households, reflecting broader patterns of social inequality.

Document Type



Financial Inclusion


Financial Behaviors

Original Citation

Grinstein-Weiss, M., Despard, M. R., Guo, S., Russell, B., Key, C., & Raghavan, R. (2016). Do tax-time savings deposits reduce hardship among low-income filers? A propensity score analysis. Journal of the Society for Social Work and Research, 7(4), 707–728. doi:10.1086/689357


Refund to Savings (R2S)


Refund to Savings (RS), saving, savings, tax, savings, contingency, tax refunds, material hardship, inequality