Here's a fun bit of personal finance math: you get a nice tax refund, then you watch it disappear at the gas pump. Analysts and economists are warning that rising gasoline prices threaten to do exactly that, eroding the benefit of larger tax refunds expected under recent legislation.
Let's look at the numbers. Brent crude futures surged to nearly $112 per barrel on Thursday, while WTI crude oil futures were trading 3.23% higher at $99.52 per barrel as of 12.25 PM ET. The national average for gas was $3.88 per gallon, according to AAA.
John Mercer, Head of Global Research at Coresight Research, told MarketDash that while refunds offer a temporary cushion, they won't fully absorb higher fuel costs. He breaks it down: total tax refunds for 2026 are expected to rise by $31–33 billion (9.4–10% year-over-year) — roughly equal to one month's typical national gasoline spending.
With gas prices already up 21.2% year-over-year as of March 16 per the EIA, consumers are spending $6.3 billion more per month. That means those bigger refunds could cover just over five months of that burden. But here's the kicker: a sharper price spike — like the ~44% year-over-year surge seen during the first eight weeks of Russia's Ukraine invasion — would shrink that window to about 2.3 months. Your tax windfall might not even last through summer.
Non-Drivers, EV Owners Insulated
Stanford economists Neale Mahoney, Jared Bernstein, Caleb Brobst, and Ryan Cummings reached a similar conclusion. They used Goldman Sachs' projection that a three-week Strait of Hormuz closure could push crude to $110 per barrel, then applied a Bayesian vector error correction model estimating U.S. retail gas prices peaking at $4.36 per gallon in May before easing — with a longer closure pushing prices even higher.
Their estimate is stark: the average household could pay $740 extra in gas costs this year. That would wipe out — and in some cases exceed — per-household tax refund estimates of $360 (IRS), $534 (Morgan Stanley), and $748 (Tax Foundation). The silver lining? Non-drivers and EV owners would be completely unaffected by this particular squeeze.
