Tax refunds are up, but many aren't feeling it

Americans rushing to meet Wednesday's tax filing deadline are getting bigger refunds on average thanks to President Donald Trump's tax law, though the savings are falling short of his promises and many say they haven't noticed a difference.

Trump's centerpiece legislative achievement so far has helped drive the average refund up by nearly $350, though that's far less than the president's promised $1,000 boost. Almost 70% of taxpayers received a refund through the start of this month, compared to 67% at the same time last year, according to IRS data.

Yet the savings aren't registering with large numbers of Americans as they confront a surge in gasoline prices driven by the U.S.-Israel war in Iran, economic uncertainty and the threat of job losses driven by advances in artificial intelligence.

That is politically perilous for Republicans, who have leaned heavily on the boost in tax refunds for their economic pitch to voters as they try to retain control of Congress in this year's midterm elections. Trump is expected to promote the tax law in a trip to Nevada this week.

The law itself, which paired tax breaks with steep cuts to the social safety net programs, has polled poorly with voters. Republicans have counted on tax refunds to turn that perception around.

Taxpayers are nearly as likely to say last year's tax changes harmed them as they were to report a benefit, according to a late March poll of 1,200 people who had already filed their tax returns by the Bipartisan Policy Center, a centrist organization. Only 27% said the 2025 tax cuts helped them, while 24% said changes hurt them. Another 38% said they didn't notice a change.

The perception is hard to reconcile with the law's provisions. The legislation raised the standard deduction, typically claimed by roughly 90% of taxpayers, by $1,150. Even for people taxed at the lowest rate, that translates into a $115 savings.

Even taxpayers eligible for the law's marquee breaks — new deductions for tips and overtime wages — were nearly as likely to report the new tax law hurt them as they were to say they helped. Among poll respondents who said they had tip or overtime income last year, 35% reported being harmed by the changes and 36% reported benefiting.

"It's really like a 50-50 proposition of, like, this helped me versus this hurt me," Andrew Lautz, director of tax policy for the Bipartisan Policy Center, said on a call with reporters discussing the results. "Those differences in perception versus reality obviously matter."

Political polarization likely played a role in the disconnect, but even 20% of Republicans surveyed said they were hurt by the tax changes, Lautz said.

Mark Steber, chief tax officer at Jackson Hewitt Inc, a tax preparation firm with more than 5,000 locations across the U.S., said he's been struck by the number of people he's encountered who didn't realize they could collect new tax breaks this year. 

"It's a large percentage of people that were not fully aware that there was a big tax bill and the reason for that is simple: most people are concerned about day-to-day economics," Steber said.

Even when people are aware of the new tax breaks, the administration's messaging has contributed to confusion, Steber and others said.

Trump has loudly touted "no tax" on tips, overtime, Social Security and auto loan interest. The monikers made for catchy campaign slogans, but have led to misconceptions about what the tax breaks actually encompass. Rather than full exemptions, the tax breaks are structured as deductions with caps, income phase-outs and fine print. 

"They named the thing so badly," Steber said. "I've had people tell me, 'I don't even have to file a tax return because I have overtime.'"

Lisa Greene-Lewis, a CPA and tax expert at TurboTax, said customers have especially struggled with tips and overtime deductions. The overtime deduction ranked highest among the questions received by TurboTax experts through early April, she said.

The Bipartisan Policy Center's poll highlights some of the challenges when it comes to ensuring tax policy changes resonate with voters, said Alex Brill, a senior fellow at the right-leaning American Enterprise Institute

Partisan polarization as well as the mismatch between Trump's "short, punchy rhetoric" and the reality of the breaks may be leading taxpayers to discount their benefits, he said. It's also possible that for some, changes in circumstances such as raises resulted in a higher tax bill even with the new write-offs, he said.

But regardless whether people recognize the boosted refund, some of the tax savings is likely to make its way back into the economy, he added. The average refund was $3,462 through early April, up from $3,116 during the same period last year, according to the IRS. 

"People don't need to be very rah-rah politically motivated — 'Hey, I got a tax cut and I love it' — in order for them to take that refund and spend that money and for there to be a little bit of a stimulus effect," Brill said.