Incentivizing tax-filing among working households and understanding preferences: Evidence from a randomized experiment

This randomized controlled trial will test how financial incentives impact tax-filing and how individuals value alternative financial products relative to cash. This study will be conducted in partnership with a financial technology company that provides online banking services and offers free tax filing. We will randomly assign 1.4 million users to receive a series of email messages and push notifications reminding them to file during the upcoming tax season, along with one of: a $5 cash incentive, $10 cash incentive, $10 increase in overdraft coverage, $20 increase in overdraft coverage, or no incentive. This will allow us to (1) measure the impact of the different incentives on tax filing and tax refund receipt, (2) compare preferences for cash and overdraft protection, (3) explore financial transaction data to understand how refunds and overdraft protection are used, and (4) compare expectations and intentions around tax refunds with realized behaviors in the transactions data. We plan for this to be the first of several studies we conduct with this financial technology partner to understand financial decision-making among working households and identify effective strategies to build financial resilience.