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A worker changes the prices for gas at a 76 station in Beverly Hills, Calif., on March 11. (Justin Sullivan \/ Getty Images)<\/p>\n
(Justin Sullivan)<\/p>\n
Americans are poised to receive bigger refunds when they file their taxes this year than they did in 2025, due to changes in the tax code.<\/p>\n
Already, U.S. households have received an average federal tax refund of $3,742, according to IRS data<\/a> as of Feb. 27. That\u2019s about 10.6% higher than the average refund was a year ago.<\/p>\n This is a big deal: For tens of millions of Americans, the day their tax refund arrives is the biggest single-day cash flow they see all year.<\/p>\n This influx of cash on a mass scale has ripple effects across the whole economy, as Americans use the money for things like paying down debt, buying big-ticket items and topping up savings accounts.<\/p>\n But this year, experts say the economic impact of the U.S.-Israeli war in Iran could derail any potential boost to the economy that would typically come from consumers spending their tax refunds.<\/p>\n Since the onset of the Iran war, the cost of oil<\/a> has skyrocketed, causing gas and diesel prices to jump too. On Friday, the average cost of a gallon of unleaded gas in the U.S. was $3.64, according to GasBuddy\u2019s live tracker<\/a>. That is about $0.72 higher than last month\u2019s average price.<\/p>\n \u201cWhen a war pushes oil up, it is not just a gasoline story,\u201d said Paul Dietrich, chief investment strategist at Wedbush Securities. \u201cGas prices have already jumped sharply, and diesel costs are rising too. That means higher costs for commuting, groceries, shipping and basic household living.\u201d<\/p>\n \u201cIf families have to spend more filling the tank and buying food, they spend less on restaurants, travel, clothing, home goods and everything else,\u201d he said.<\/p>\n The rise in gas prices is just one of several impacts the war in Iran could have on Americans\u2019 household budgets.<\/p>\n Consumers have been under growing economic pressure over the past several years from post-Covid inflation, tariffs, mounting debt<\/a> and a labor market that started to weaken<\/a> last year.<\/p>\n \u201cThere are still inflation embers in the U.S. economy, and an increase in energy has the potential to raise inflation expectations,\u201d said Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management Co.<\/p>\n This, in turn, \u201cmay cause [interest] rates to have to go higher to tamp down inflation,\u201d he said.<\/p>\n Already, the war and its economic effects have driven up the cost of home mortgages, whose rates are tied to U.S. Treasurys. On Friday, the interest rate for an average 30-year fixed-rate mortgage was 6.41%, according to Mortgage News Daily<\/a> \u2014 up from just 5.9% right before the U.S. attacked Iran.<\/p>\n