By Megan Cerullo
Updated March 19, 2026 / 5:50 PM EDT
Rising U.S. gasoline prices tied to the conflict involving Iran could largely offset the larger tax refunds many households expect this year, researchers and economists say.
Analysts at the Stanford Institute for Economic Policy Research estimate the typical U.S. household will pay about $740 more for gasoline this year because global oil prices climbed after attacks linked to Iran. That increase is nearly identical to the average boost in individual refunds projected by the Tax Foundation: $748 higher this filing season under last year’s Republican-backed One, Big, Beautiful Bill.
The IRS reported average refunds of $3,676 as of early March, an 11% increase from the same point last year. But how much of that extra money households actually keep depends on how long disruptions to oil shipments last and whether the Strait of Hormuz is effectively blocked to tankers carrying crude and liquefied natural gas. Stanford’s calculation assumes a three-week closure; a shorter disruption would shrink the additional gasoline bill. The researchers also note the “rockets and feathers” pattern, where pump prices rise quickly after input-cost shocks but fall back slowly.
A separate analysis by Pantheon Macroeconomics reached a similar conclusion, saying larger refunds will provide only modest, short-lived support for spending. Pantheon estimates higher fuel costs will reduce household real incomes by roughly $15 billion per month, while the increased refunds from February through April would add about $10 billion total.
Markets have already reacted: Brent crude traded near $111 a barrel and the U.S. benchmark around $99 amid Gulf attacks, and AAA reported the national average gas price at $3.88 per gallon, about 96 cents higher than a month earlier.
The One, Big, Beautiful Bill removed taxes on some overtime and tipped income and raised the SALT deduction cap to $40,000. Many families plan to use refunds to shore up finances: a Bank of America Global Research survey found 36% intend to pay down debt, about 10% will make a major purchase or cover everyday expenses, and roughly 13% expect to save the money.
In short, economists warn that higher fuel bills driven by geopolitical disruption could largely erode the extra relief from bigger refunds, with the final impact hinging on the duration and severity of supply disruptions.