The Effects of Tax-Time Interventions on Savings Rate and Amount: A Systematic Review and Meta-Analysis

Background. Encouraging and facilitating saving is a focus of many interventions aimed at building financial well-being. Tax refunds provide an opportunity for accumulating savings because they are funds that are outside the usual flow of household income. To capitalize on the possibility of capturing tax refund funds for short and long-term saving, a variety of interventions have been designed and implemented for low- and moderate-income households. These interventions aim to increase savings and/or investment, and thereby increase financial security and well-being. Interventions generally provide education about savings and/or investments, and incentivize, facilitate, and/or encourage participants to save or invest their refund, when participants are filing income taxes. To date, no systematic review of tax-refund interventions has been conducted to provide evidence of their effectiveness. To evaluate their effectiveness, this paper will fill in the gap by synthesizing effects of tax time interventions reported between 2012-2021.

Method. Systematic review methodology was used for the search, selection, and coding of studies. Meta-analysis quantitatively synthesized effects of interventions. Campbell Collaboration procedures and guidelines for systematic review and meta-analytic methods were used. We searched for and retrieved both published and unpublished studies through a comprehensive search that included multiple electronic databases, conference proceedings, and grey literature sources. We also searched in Google and Google Scholar using key terms.

Results. After locating 5,434 titles and screening 95 full-text titles, our review included 14 studies reported on in 25 reports. The predominant intervention mode was the use of prompts and messaging using tax filing software at the time of tax filing. The predominant intervention goal was saving all or portion of refund or purchasing a U.S. savings bond, followed by saving into a bank account. Five studies contributed 13 effect sizes for savings amount. The results of the meta-analytic model indicate that those participating in the tax time intervention saved more money than those in the control group (g= 0.06, SE= 0.01, p= 0.003, 95% CI [0.04, 0.09]; I²= 91.83). In terms of dollars, the intervention group saved an average of $52.30 (SE = 11.30, [$16.6, $88.1]; I² = 96.98). Nine studies contributed 35 outcomes examining the effects of tax time savings interventions on savings rate, which measures the number of people who saved and did not save in each group. The results of the meta-analytic model indicated no statistically significant difference in savings rate between the intervention and comparison groups (LOR= 0.35, SE= 0.15, p= 0.6, [-0.27, 0.72]; I²= 98.76); the mean odds ratios are 1.41 (SE = 1.17, [0.97, 2.05]).

Conclusions and Implications. Overall, the evidence on the effects of tax-time interventions for saving amounts and saving rate is relatively weak, but it is yet difficult to ascertain. Social work practitioners and policy advocates who wish to advance these tax-time interventions should support the generation of additional evidence. Practitioners working in this area should collaborate with researchers to design high-quality experimental research on interventions, either independently or in combination, to gather more definitive evidence on these interventions.