Earlier this week, I took part in an event showcasing a unique partnership supported by the foundation. Refund to Savings (R2S) is a collaboration between Intuit (the company behind TurboTax), and researchers at Washington University in St. Louis and Duke University, aimed at helping low-income families build savings at tax time. The event was hosted by the New America Foundation and also included officials from the U.S. Department of Treasury and the Federal Reserve.

For many working families, tax time represents the single largest infusion of money they receive all year, thanks to benefits like the Earned Income Tax Credit. For families struggling to make ends meet, that influx offers a chance to pay down debt or purchase big-ticket items like a new refrigerator or car repair. But if they’re able to set some of that money aside, tax refunds are also a rare opportunity to build savings—for unanticipated emergencies as well as longer-term goals like education or homeownership.

In the R2S experiment, researchers made two kinds of changes to TurboTax’s FreeFile tax prep software: They added motivational prompts encouraging filers to save, and recommended savings amounts. These changes were tested with a randomized sample of more than a half million low-income filers.

Presented at Tuesday’s event, the early findings are very promising: The new prompts and recommendations measurably increased both the number of people who saved money and the amount they saved. For example, 30 percent of people who saw a message suggesting that they save half of their refund successfully saved a portion of their refund for at least six months, compared to 25 percent of people in the control group. Overall, the changes encouraged more than 4,800 households to save an additional $6 million. That difference might seem modest, but the scale of the tax system is such that even small changes can have a big impact.

Extending these prompts to all tax filers could significantly increase U.S. household savings, and it could do so at virtually no cost to either business or taxpayers. The research suggests that many low-income households are already motivated to use their refunds to enhance their financial security—they just need support and tools that make saving easy.

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