By Megan Cerullo
Updated on: March 19, 2026 / 5:50 PM EDT / CBS News
Higher U.S. gasoline prices linked to the Iran war could largely cancel out the larger tax refunds many Americans are set to receive this year, researchers say.
Economists at the Stanford Institute for Economic Policy Research estimate the typical U.S. household will spend about $740 more on gasoline this year because of the global oil price jump after attacks involving Iran. That increase would nearly match the average boost in individual tax refunds, meaning the extra refund money could be eaten up by higher fuel costs.
The Tax Foundation, a nonpartisan group, projects the average individual refund will be $748 higher this filing season because of tax cuts in the Republican-backed One, Big, Beautiful Bill Act signed last year. The IRS reported average refunds of $3,676 as of early March, an 11% rise from the same point last year.
How much consumers ultimately feel the strain depends on the duration of the conflict and whether the strategic Strait of Hormuz remains effectively blocked to tankers carrying oil and liquefied natural gas. Stanford’s estimate assumes a three-week closure; a shorter disruption would reduce the extra household gasoline bill. The researchers also note the “rockets and feathers” effect: retail prices jump quickly when input costs rise but fall slowly when those costs retreat.
A separate analysis from Pantheon Macroeconomics reached a similar conclusion: larger refunds will provide only modest, short-lived support for spending. Pantheon estimates higher fuel costs will cut household real incomes by about $15 billion per month, while the increased refunds between February and April would boost household budgets by roughly $10 billion total.
Energy markets have already reflected the disruption. Oil prices spiked amid Gulf attacks, with Brent near $111 a barrel and the U.S. benchmark around $99. AAA reported the national average gas price at $3.88 per gallon, an increase of 96 cents from a month earlier.
The Trump administration has promoted the tax changes enacted in the One, Big, Beautiful Bill, which eliminated taxes on some overtime and tipped income and raised the SALT deduction cap from $10,000 to $40,000. Many households plan to use refunds to shore up finances: a Bank of America Global Research survey found 36% of respondents intend to pay down debt with their refund, about 10% will make a major purchase or cover everyday expenses, and roughly 13% expect to save the money.
Edited by Alain Sherter