Modest Tax Refund Boost Undercut by Rising Gas Prices

The White House on Wednesday said Americans are keeping more of what they earn this tax season. 

But so far, the average tax refund has totaled about $350 more than last year — far less than the projected $1,000 touted by the Trump administration — and a surge in gas prices due to the war in Iran threatens to wipe out those gains, reports The Washington Post.

"There's a bit of a disappointment in how much those refunds are," Tom O'Saben, director of tax content and government relations at the National Association of Tax Professionals, told NPR.

"People are quietly, perhaps, happy but not to the extent where I would call it significant."

U.S. wholesale prices surged last month as the war in Iran drove up energy costs.

The Labor Department reported last week that soaring gasoline prices pushed consumer prices up 3.3% last month from a year earlier, the largest year-over-year increase since May 2024.

Compared to February, March consumer prices jumped 0.9%, the biggest gain in nearly four years.

Food prices, which are likely to be a key issue in next year’s midterm elections, fell 0.3% in March after surging 2.4% in the previous month.

The war in Iran and soaring energy prices will lead to an annual decline in oil demand for the first time since the pandemic, according to a forecast released Tuesday by the International Energy Agency.

"The administration's effort to pivot toward affordability has been undercut by the foreign policy decisions in ways that are creating clear messaging issues for the administration and real difficulties for households that are struggling to get by," Neale Mahoney, a Stanford University economist, told the Post.

Stanford economists estimate that the typical American household will pay an extra $776 this year due to higher gas prices.

The White House highlighted the increase in refunds.

"President Trump has always been clear about temporary disruptions as a result of Operation Epic Fury, but the President's proven agenda of tax cuts, deregulation, and energy abundance delivered historic job, wage, and economic growth in his first term, and it's again laying groundwork to repeat the success in his second term," White House spokesman Kush Desai said in a statement.

Treasury Secretary Scott Bessent told reporters Tuesday that "a small bit of economic pain for a few weeks is worth taking off the incalculable tail risk of the either a nuclear Iran or a nuclear Iran that uses that weapon."

"So the conflict will end, prices will come down, and then headline inflation will come down, and with that, gasoline prices will come down," Bessent said. "We've seen them edging back down in the past 10 days."

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