The financial relief promised by President Donald Trump’s signature second-term legislation is being wiped out by a surge in energy costs tied to the ongoing conflict with Iran.
While the “One, Big, Beautiful, Bill Act” successfully boosted tax refunds for millions of Americans this year, those gains are now being eclipsed by the price of a tank of gas.
Signed into law on July 4, 2025, the act introduced popular deductions for overtime pay and tips. According to IRS data released on March 27, these provisions helped push the average tax refund to $351—an 11.1% increase over last year.
However, a Reuters report on Friday indicates that the cost of fuel is rising at more than double that rate.
Estimates from the Stanford Institute for Economic Policy Research suggest the average driver will spend an additional $857 on gasoline annually due to the war. When the math is settled, even after accounting for the new tax benefits, the average American is still down roughly $500. This figure does not include the rising costs of groceries and other goods impacted by inflation and the conflict.
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The spike is driven largely by the paralysis of global shipping. On Saturday, AAA reported the national average for a gallon of gas hit $4.14, a steep climb from the $2.98 average seen on February 28, the day “Operation Epic Fury” began.
Despite a two-week ceasefire, which Vice President JD Vance described as “fragile,” the Strait of Hormuz remains effectively blocked. Roughly 20% of the world’s oil traditionally passes through that narrow waterway.
The economic outlook could darken further if the blockade persists. The Stanford Institute’s projections were based on the assumption that the strait would reopen this past Friday. Since it remains closed, the $857 annual cost estimate may be a conservative floor rather than a ceiling.
The timing of the price surge creates a difficult backdrop for the administration. President Trump is scheduled to visit Arizona and Nevada in the coming weeks to promote the law’s tax cuts.
Congressional Republicans, who passed the bill without Democratic votes, have recently leaned into the benefits by rebranding the legislation as the “Working Families Tax Cuts Act.”
However, with the 2026 midterms approaching, the broader issue of wartime affordability continues to dominate the national conversation.
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