Donald Trump tax legislation: IRS Tax refunds jump after Donald Trump’s new legislation but taxpayers won’t have much benefits. Details here
“Next spring is projected to be the biggest tax refund season of all time,” Trump said in a prime-time speech in December aimed at addressing voters’ concerns about the economy and persistently high prices.
But this was before the Iran war, which started on February 28. Oil and gas prices have risen rapidly since then, with the average gas price nationwide reaching $3.94 on Sunday. That figure is up more than a dollar from just a month ago.
Gas prices are likely to remain high for some time even if the war ends soon, as transportation and production have been disrupted and will take time to recover. Economists now expect slower growth this spring and throughout the year as gas dollars are less likely to be used for restaurant meals, new clothes or entertainment.
Neale Mahoney, director of the Stanford Institute for Economic Policy Research, calculates that gas prices could peak at $4.36 per gallon in May, followed by slow declines throughout the rest of the year, based on oil price forecasts from Goldman Sachs. The idea that gasoline prices fall much more slowly than they rise is so ingrained among economists that they call it the “rocket and feathers” phenomenon.
In this scenario, the average household will pay $740 more for gas this year; That’s nearly equal to the $748 increase in refunds the Tax Foundation estimates the average household will receive.
Through March 6, refunds increased by much less than that: $352 from $3,324 in 2025, to an average of $3,676, according to IRS data. However, average refunds may increase as more complex returns are filed.
Other estimates show similar effects. Economists at Oxford Economics, a consulting firm, estimate that if gas prices averaged $3.70 per gallon all year, it would cost consumers about $70 billion; That’s more than $60 billion in incremental tax refunds.
