One, Big, Beautiful Refund: How The $1000 Jump In Tax Refunds Will Impact Consumers

Given poor consumer sentiment (which earlier today supposedly tumbled to a 12 year low, just in time for a new record high in stocks) and fears around a “K-shaped” economy, the Trump administration has been focused on announcing new policies aimed at "increasing affordability," especially with midterms looming. The initiative to improve affordability began mid last year with the passage of the One, Big, Beautiful Bill and the promise of tax relief for American families. While the tax cuts were implemented retroactively for 2025, tax withholding rates were not adjusted. Hence, this will drive a higher-than-average tax refund this year; in fact as reported earlier this will be the largest tax refund season ever.

With January 26th marking the official start of the 2026 tax filing season, the Treasury published a factsheet estimating a sharp increase in the average tax refunds for a significant share of families in the US. To analyze the impact of these refunds, Goldman's economists examine the implications of these tax refund increases for the lower income consumer and their impact on ABS delinquency rates