Travel’s Tax Refund Boom Is Falling Short

Key Points

• Tax refunds are up 13% this year but fall short of the 25% growth initially projected, dampening expectations for a travel spending surge.
• Policy changes have benefited higher-income households, who are less likely to receive refunds but may still spend more due to lower tax burdens.
• Spending driven by tax refunds accounts for less than 1% of the projected $912 billion in domestic leisure travel for 2026.

Summary

This year’s tax refunds are higher than last year but have grown less than expected, leading to a smaller-than-anticipated boost in U.S. travel spending. Policy changes have steered benefits toward higher-income households, who are less likely to receive large refunds but still see reduced tax payments. However, spending linked to tax refunds makes up only a small fraction of the overall domestic leisure travel forecast, so the overall impact on the travel industry remains limited.