‘the Sugar High Will Be Short Lived’: Trump’s Big Bet On Tax Refunds Might Not Pay Off

President Donald Trump is betting that larger tax refunds this spring will help sate Americans’ cravings for economic relief and boost GOP fortunes in November. The political payoff may be fleeting.

The White House believes the average refund could increase by $1,000 thanks to tax cuts in the GOP’s signature legislation, passed last summer. But as tax season kicks off, economists and Republican strategists — and even some of the president's own allies — warn that the boost American households receive from the refunds may wear off by November.

While Trump and his top advisers have been banking on the refunds as a pocketbook proof point — a moment when voters would finally feel the economy turning in their favor — those skeptics caution that the money could be quickly swallowed up by stubbornly high prices elsewhere.

“The sugar high will be short-lived if [the refunds], in fact, go toward paying and supporting prices of things like additional health care costs, additional insurance costs, additional electricity costs, additional heating costs,” said Diane Swonk, chief economist at the accounting firm KPMG U.S. “The real issue is we’ve gotten prices way out of line, and it takes a very long time to catch up.”

Even allies warn that in a rapid-fire news cycle, the refunds may be long forgotten by the time voters show up to the polls. So far this year, Trump has struggled to keep the spotlight on affordability, with his high-profile speeches quickly overshadowed by everything from a possible invasion of Greenland to ongoing immigration clashes in Minnesota.

“Any employer will tell you that when they give their employees a bonus, they get goodwill for a little bit, but six months later, the employees have forgotten about their bonus,” said Alex Conant, a GOP strategist. “[Voters] won’t remember it unless the president and candidates remind them.”

That concern highlights the gamble the White House is taking on affordability as it seeks to connect the dots for voters between positive economic metrics — like strong economic growth and stock market highs — and their day-to-day realities.

And it helps explain why Trump, Treasury Secretary Scott Bessent and other top Republicans bring it up so often.

“Prosperity means more money in people's pockets, and they notice that every time they go to fill up with gas, and they're going to know it when they get their tax returns that, this year, are going to be at least a thousand dollars, if not more, greater than it's been in the past,” Senate Majority Leader John Thune said in an Oval Office appearance with the president this week. “And that's a result of the work that you've done with this whole group.”

White House aides argue that the refund checks are just one piece of a broader economic strategy that also includes $1,000 “Trump Accounts” for newborns, no taxes on tips, overtime and Social Security. That’s on top of supply-side policies like allowing businesses to expense the full cost of equipment and machinery the year they are put into service and a broad-based deregulation push, they say.

“The effects of President Trump’s historic tax cuts for American families go beyond a one-time tax refund check,” White House spokesperson Kush Desai said in a statement. “With more money in families’ pockets driving consumption and full equipment expensing driving investment, every American is going to feel accelerating job, wage, and economic growth.”

The megalaw was designed to deliver its most tangible benefits ahead of the midterms, reflecting lessons the White House learned from Trump’s 2017 tax cuts.

Back then, the IRS immediately adjusted withholding tables, meaning Americans saw a small amount of extra money in every paycheck. The idea was to give people more spending money before the midterms.

But officials say those cuts took effect too late for many voters to fully register the benefits before the election. This time, they made the tax cuts retroactive to the start of 2015, and the IRS did not immediately adjust withholdings last year to reflect the new law, meaning millions of Americans should expect what amounts to a lump sum payment this year, in addition to increased paychecks.

The 2017 tax cut became so unpopular that Republicans were forced to pivot to other issues like immigration and health care; ultimately, the GOP lost 41 seats in the 2018 elections. As early as last spring, Bessent was warning about the political consequences that could arise if Republicans failed to move quickly on Trump’s tax agenda.

But the Trump administration this year has an issue it did not have to contend with during its first term: a persistent cost-of-living problem that is coloring voter perceptions over the state of the economy. And while economists note that Trump did not create the problem, he hasn’t solved it either, which means the additional refund could be eaten up by higher prices for everything from housing to food.

Tax cuts and larger tax refunds can also lead to higher spending, which is expected to slow the process of bringing down inflation that’s been toxic to Trump’s approval ratings. And pocketbook pressures are compounded by an unusually cold winter, driving up electricity and other heating bills, as well as rising health insurance costs.

The White House, meanwhile, has been selling this spring as “the largest tax refund season in U.S. history,” with Bessent estimating that between $100 billion and $150 billion will be returned to households.

A recent analysis from BofA Global Research estimates that refunds in 2026 could be $65 billion higher than in 2025 — when Americans received $93.5 billion back from the government — with most of those payments made between February and April.

But very few low-income filers are expected to receive a refund, according to a recent analysis by the nonpartisan Tax Foundation. While some may see other benefits – including from the elimination of taxes on tipped income, or the larger child tax credit — the workers feeling the biggest pinch from the affordability crisis are least likely to get a check thanks to Trump’s tax bill.

What’s more, many of the tax cuts that were included in the legislation are narrowly targeted toward specific populations. If you are not a worker who earns tips or overtime — and you're not a senior — most of the tax benefits come from a larger standard deduction. For many, the cuts will be much smaller than the headlines they may have seen, said Erica York, the Tax Foundation’s vice president of federal tax policy.

“People could be surprised in a bad way if they think: ‘Oh, my tax refund is going to be $1,000 larger,’ and then it's not,” York said.

Despite the administration’s efforts to course correct this time around, strategists argue that one-time payments have rarely reshaped voters’ views of the economy on their own. Even the much larger stimulus checks sent out during the Covid-19 pandemic delivered only temporary boosts to consumer sentiment.

GOP strategist Doug Heye, who saw similar strategies play out while serving in the George W. Bush White House, said the administration may be overestimating how much a refund can change voters’ views of the economy.

“It speaks to the concern that voters have,” Heye said, “but only really speaks to the symptom and not the problem.”