Higher gas prices could wipe out tax refund gains from Trump tax law
Mar 22nd 2026 · United States
Analysts say higher gasoline costs driven by the Iran conflict and closure of the Strait of Hormuz could erase the boost in household tax refunds from the One Big Beautiful Bill Act, with some models showing nearly identical gains and losses for typical households.
- Stanford modeling found that if the Strait of Hormuz stays closed three more weeks and oil hits $110 per barrel in March, gas could peak at $4.36 per gallon in May and raise average household gas costs by about $740, nearly canceling the $748 average refund boost projected by the Tax Foundation.
- U.S. pump prices rose to $3.91 per gallon, an increase of more than 90 cents since Feb 28 after the United States launched major operations against Iran and the Strait of Hormuz became effectively closed.
- Oil has spiked above $115 per barrel amid the conflict, and more than 20 percent of global oil exports transit the Strait of Hormuz.
- Oxford Economics estimates consumers could spend $60 billion more on gas in 2026 if prices average $3.60 per gallon, which would almost exactly offset refund gains from the tax law.
- The Energy Information Administration projects U.S. gas will average $3.34 this year and $3.18 in 2027, while Goldman Sachs warns oil could remain above $100 per barrel through 2027.
- The White House temporarily suspended the Jones Act to ease shipping constraints, but the Center for American Progress estimates that step would lower gas prices by only about three cents per gallon.