Higher Gas Prices to Wipe Out Trump’s Tax Refunds

In January, the White House celebrated what it claimed to be the “largest tax refund season in U.S. history,” promising hundreds of dollars more in refunds this tax year as a result of changes to the tax code under the One Big Beautiful Bill Act (OBBBA).

With oil prices hovering near $100 per barrel—and spiking above $115 this week—gas prices have reached their highest levels since 2023.

But economists warn those savings could go up in smoke—or rather exhaust—cancelled out completely by elevated gas prices as a result of the ongoing war in Iran, Sasha Rogelberg reported for Fortune.

An analysis led by economists at the Stanford Institute for Economic Policy Research found that if the Strait of Hormuz remains closed for another three weeks and oil tops out at $110 per barrel in March, gas prices could peak at $4.36 per gallon in May.

As a result, the report found Americans would pay, on average, $740 more for gas this year.

The economists noted that this extra spending would cancel out the $748 increase in tax refunds projected for a typical household, according to the Tax Foundation.

Gas prices have surged more than 90 cents since Feb. 28, to $3.91 per gallon, when President Donald Trump initiated a major military operation against Iran in a joint effort with Israeli forces.

The ongoing strikes and counterattacks have resulted in the effective closure of the Strait of Hormuz, the chokepoint through which more than 20% of the world’s oil supply is exported.

With oil prices hovering near $100 per barrel—and spiking above $115 this week—gas prices have reached their highest levels since 2023. But even if the conflict ends within weeks, Americans are still likely to feel pain at the pump.