The research by Wrap Cymru found recycling targets could be reached nine years early if just half of all food and dry waste was recycled.
Wales recycled 56% of waste in 2014/15 and aims to recycle 70% by 2025.
Environment secretary Lesley Griffiths said changes in people's habits could have "enormous environmental" benefits.
The survey, carried out on behalf of the Welsh Government, sampled 210 households in each of the 22 local authorities over the summer and winter last year.
It found a 14% rise in household waste being recycled compared to 2009.
Yet it also discovered 17% of waste electrical and electronic equipment and 50% of clothing and textiles were sent to landfill.
The study has been published as Ms Griffiths is due to set out her plans to create a "more circular economy" - where waste products are supplied back to Welsh manufacturers as secondary raw material and re-used.
She said: "It's great to see people's recycling habits are significantly improving. However, this research shows there's still more we can do to meet our aim of being a zero waste nation by 2050.
"As well as the obvious environmental benefits, being a high-recycling society provides the basis for a strong circular economy.
"Re-circulating high value materials has an enormous potential to boost the Welsh economy, create jobs re-processing these materials here in Wales and lower our carbon footprint."
Figures have previously shown the amount spent by Welsh councils on landfill has fallen by more than 23% in the last four years.
The total weight of landfill dropped from 641,000 tonnes in 2012/13 to 450,000 tonnes in 2014/15 - with the highest recycling rates in Denbighshire, Pembrokeshire, Monmouthshire and Ceredigion.
A quarter of household waste in Wales is made up of food and another quarter of material that could be recycled, a study has found.