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Rising Gas Prices May Offset Larger 2026 Tax Refunds for U.S. Households, Analysis Finds
Higher gas prices from the U.S.-Iran war are expected to consume the average $740 tax refund increase, limiting extra spending for most U.S. households in 2026, economists say.
- On March 19, economists warned higher oil prices after the Iran war could offset the $748 average tax refund rise under the One Big, Beautiful Bill Act for U.S. households.
- As the war closed the Strait of Hormuz, halting 20% of global oil flows, Brent crude futures neared $112 and WTI crude futures hit $99.52, pushing the national average gas price to $3.88.
- Data from the Bank of America Institute show gas spending rose 14.4% in the week ended March 14, while Stanford's model estimates households will pay $740 more this year, nearly offsetting tax refunds.
- Lower- and middle-income households face heavier burdens as they spend nearly 4% of earnings on gas while receiving smaller refunds, and economists expect higher prices to worsen inflation and slow growth this year.
- Oxford Economics calculates that if gas averages $3.70 this year, consumers would spend about $70 billion, exceeding the $60 billion in increased refunds, while economists warn the rocket and feathers pricing dynamic could keep pump costs high.
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The large jump in tax refunds from President Donald Trump's tax cut legislation was meant to boost the U.S. economy, but surging gas prices are on track to eat them up, leaving Americans with little extra to spend.
·Washington, United States
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Bigger tax refund this year? You'll likely spend it at the gas pump, data shows
“The longer these gasoline prices persist, the more that will gradually sap consumer discretionary spending,” said David Tinsley, senior economist at the Bank of America Institute.
·Cleveland, United States
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Total News Sources92
Leaning Left21Leaning Right3Center43Last UpdatedBias Distribution64% Center
Bias Distribution
- 64% of the sources are Center
64% Center
L 31%
C 64%
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