US Economic Pulse: Tax Day

• Individual tax refunds in 2026 are projected to reach nearly $348 billion by June, up 15.2% from 2025 and likely to surpass the 2022 record. 
• This increase in refunds is expected to provide a boost to consumer spending, even as overall sentiment remains historically low.
• Consumer sentiment is depressed due to persistent inflation, especially from higher oil and gasoline prices, and slowing job gains. 
• The outlook for spending is mixed, hinging on future movements in oil and equity prices, which directly impact inflation and real income growth.
• The baseline forecast for 2026 sees real consumer spending growth slowing to 2.2% (down from 2.6% in March), with real disposable income growth at 1.7%.

In our tracking, total refunds are on pace to surpass last year’s windfall and are likely to eclipse 2022’s record high.

April 15, 2026, marks the deadline for individuals to file for 2025 — a key date in a tax season that kicked off on January 26th. For a breakdown of what’s driving returns higher and the shifting impact on consumer spending, see our blog post.

We estimate that just shy of $348 billion in refunds will be issued before June 30 this year, up 15.2% from 2025. That's revised up from our estimate of $335 billion in March and is good news for anyone holding out hope for spending in 2026, even as consumer sentiment hits an all-time low. While April’s drubbing came before the ceasefire in Iran, it follows months of slowing job gains and persistently higher inflation.

The result has kitchen table issues — jobs and prices — front of mind for households. Consumers are sensitive to the prices they see often, and the rise in gasoline was sudden and sharp in March. Prices will come down, but it may take time. Until then, expect consumers to believe what they see and for sentiment to remain in the basement.

The outlook for spending in 2026 is more nuanced. Swings in sentiment may reflect uncertainty about the outlook, but they must be weighed against a low unemployment rate and the past gains households have enjoyed.

Still, as oil and equity prices go, so goes a big part of our outlook for the US economy. For the impact on real income and spending, the question is: how high will oil prices go, and how long will they remain elevated?

Forward-looking equity prices may have recovered following the ceasefire, but higher oil prices will feed into headline and core inflation. In our forecast, this weakens the growth of real income and wealth and softens the outlook for consumer spending.

Our April baseline, published prior to the announced ceasefire, includes a higher peak oil price and lower equity prices than we’re seeing today. To compensate for such developments, each month we publish alternative optimistic and pessimistic scenarios for the US economy each month. The range of outcomes bracketed by these scenarios is helpful in assessing the magnitude of the impact of higher prices.

In our baseline scenario, core inflation rises from 2.9% in the fourth quarter of 2025 to 3.3% by the second quarter and remains there in 2026. Here core inflation is as measured by the personal consumption expenditures index, on a four-quarter basis. While this excludes food and energy prices, core inflation rises because petroleum products are a key input into many processes, namely, transportation services.

April’s forecast also includes a smaller-than-expected personal tax cut from the January report on personal income. Here the Bureau of Economic Analysis’s (BEA) initial estimate maps well to our tax tracker: Refunds are on average larger, but the number of returns processed is roughly flat. In our view, this is a result of sustained wage growth and retroactive tax changes, but little change in the number employed.

Together, the result lowered our forecast for real consumer spending growth this year to 2.2%, down from 2.6% in March. While below trend, growth is supported by a steady increase in real disposable income of 1.7%, down from 2.4% in March. 

In our optimistic scenario, core inflation rises to a more modest 3.1% in 2026. Higher than in our March baseline, but the result is less drag on real consumer spending. In this scenario, spending grows 2.3%, supported by growth of real disposable income.

In our pessimistic scenario, oil prices are higher for longer and equities are lower. Here, growth of real spending slows to 1.7% in 2026, and higher inflation undermines the growth of real disposable income, up a lackluster 1.0%.

The good news for today is that markets are leaning toward the optimistic scenario. Suggesting that if the ceasefire holds, there’s a good chance we’ll be revising up our estimates for income and spending growth in May.

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.