Experts predict that larger tax refunds in 2026 could lead to a temporary boost in consumer spending. Kevin Hassett, Director of the National Economic Council, shared insights during a discussion on CNBC’s “Squawk on the Street,” emphasizing that these refunds are likely to have a positive impact on overall consumption. However, spending patterns differ significantly among income groups. According to a note from Piper Sandler, households earning between $30,000 and $60,000 generally utilize about 30% of their tax refunds for discretionary purchases, while those with incomes exceeding $100,000 tend to allocate only 15% of their refunds for similar spending.
Data from a National Retail Federation survey conducted in 2025 revealed that 82% of taxpayers anticipating a refund intended to use it for debt repayment or savings, indicating a cautious approach towards financial management among consumers. Furthermore, challenges such as inflation driven by tariffs or rising Affordable Care Act health insurance premiums could also influence spending behaviors, as noted by Morgan Stanley’s Berger in a recent podcast.
As tax season approaches, the anticipation of larger refunds could inspire increased consumer confidence and spending, particularly among middle-income earners who are more inclined to invest these funds in their immediate needs and desires. Ultimately, this potential influx of funds into the economy underscores the complex interplay between consumer behavior, income levels, and broader economic conditions.