Millions of Americans are receiving bigger tax refund checks this year. Millions are also filling up their tanks at prices not seen in years. JPMorgan has done the math on what that means for household spending.
JPMorgan analyst Michael Hanson said the gas price shock stemming from the Iran war will eat into this year’s refund boost, but likely not eliminate it entirely. The bank’s base case is that the refund effect still outweighs the energy hit, at least for now, according to Yahoo Finance.
Gas price hikes do not outweigh tax refunds
Hanson said JPMorgan continues to assume the total refund benefit for 2026 is “a bit over $200 billion, with perhaps $180 billion of that recognized in the first half of the year.”
Against that, he calculated that today’s elevated gas prices “would only incur an additional $100 hit to purchasing power, under the important assumption that this level persists for the entire year.”
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On the question of a full wipeout, Hanson was cautious but direct. “Probably not, but it could if lost global supply pushes retail gasoline prices near $5 per gallon or more,” he said, according to Yahoo Finance.
The mechanism matters. “The increase has to come at the expense of some other part of households’ spending and/or accumulated savings. This year, it may get paid straight from the tax refund checks now arriving in the mail,” Hanson said, according to CBS News.
How much will consumers spend on gas this year?
Independent research makes the gap look even tighter than JPMorgan’s base case suggests. Economists from the Stanford Institute for Economic Policy Research estimate that the average U.S. household will spend an additional $740 on gas this year because of the oil price jump following the Iran war, according to CBS News.
The Tax Foundation estimates the average individual tax refund will be $748 higher this year due to the One Big Beautiful Bill Act, according to CBS News. That puts the two figures almost exactly equal, leaving households with virtually no net gain in a worst-case scenario.
President Donald Trump had called the 2026 filing season “the largest tax refund season of all time” in a December speech. That was before the Iran war began on February 28 and sent oil prices sharply higher, according to Fortune.
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Lower-income households feel the gas squeeze most
The impact is not evenly distributed. Lower and middle-income households are likely to be hit the hardest because they receive smaller refunds while spending a greater share of their income on gas, according to PBS News.
“The energy shock is going to hit those who have the least cushion,” said Alex Jacquez, chief of policy at the Groundwork Collaborative and a former Biden White House economist. “And it doesn’t look like those tax refunds are going to be here to save them,” according to PBS News.
Bank of America Institute data showed that spending on gas on the bank’s credit and debit cards jumped 14.4% in the week ended March 14 compared with a year ago, Fortune noted. Before the war, that same spending was running 5% below the prior year.
Key figures on tax refunds vs. gas costs:
- JPMorgan 2026 refund benefit estimate: Just over $200 billion total, according to Yahoo Finance
- JPMorgan refund benefit in first half: Approximately $180 billion, Yahoo Finance noted
- JPMorgan gas price purchasing power hit: Approximately $100 billion if prices hold, according to Yahoo Finance
- Stanford estimate: Average household pays $740 more in gas this year, CBS News reported
- Tax Foundation estimate: Average refund up $748 per household, CBS News noted
- Gas price threshold for full wipeout: Near $5 per gallon, according to Hanson
- Bank of America gas spending increase:14.4% year over year in mid-March
Energy shock pressures wider economy
Most analysts still expect the U.S. economy to expand in 2026, but more slowly than projected before the Iran war began, according to PBS News. Higher gas prices worsen near-term inflation. Over time, weaker consumer spending also slows growth.
Dollars spent at the pump are dollars not spent at restaurants, clothing stores, or on entertainment. That substitution effect is what turns an energy shock into a broader economic drag, even when the headline refund numbers look supportive.
For investors, JPMorgan’s message is not that the consumer is broken. It is that the refund cushion is thinner than the headline numbers suggest, and that the margin of safety for spending growth narrows significantly if gas prices stay elevated or move higher still.
Related: IRS tax refunds are up $350 this year: Here’s how to use yours
