As the calendar nears April, the clock is ticking on the tax selling season, which has produced mixed results according to some dealers.
Due to changes in the tax code with the “One, Big, Beautiful Bill,” which included no tax on tips and overtime, and increased standard deductions, refunds were expected to increase this tax season. According to IRS data through March 6, the average refund was up 10.6 percent from $3,324 to $3,676 sent to 43.7 million taxpayers.
Cox Automotive Chief Economist Jeremy Robb estimated that only 35 percent of refunds have been sent back to consumers at the point in the latest Manheim Used Vehicle Value Index.
“[It] could mean we see an extended, positive impact on consumer spending patterns well into April,” Robb said in the press release.
CarGurus noted a 5 percent increase in its Used Vehicle Demand Index in February as the tax season started.
“Used car demand had its strongest February in years, driven by value-focused shoppers choosing lightly used 2024 and 2025 models over new cars,” said Kevin Roberts, Director of Economic and Market Intelligence at CarGurus.
Some dealers noted an early spike at the start of the season, including Keith Thacker of Autoland in Somerset, Kentucky. He noted they sold 33 vehicles in February, eight above their average.
“Sales have been good. We sold a few more in February,” Thacker said. “We did have fewer big payoffs. Consumers are using their returns to catch up on bills instead of paying off vehicles.”
Cesar Stark of S&S Motors in El Paso, Texas, noted sales have been more spread out instead of spiking at the beginning of the season. He has not seen a change in the average down payments.
Mike Clark of C&C Cars in Pinellas Park, Florida, expressed disappointment in the early results from this tax season.
“It’s not been as strong,” Clark said. “In years past, we’d get some payoffs. We’re not getting the payoffs or bigger down payments. The talk was that there would be more money and that didn’t happen.”
As tax season winds down, consumers are also faced with increased gas prices that could eat into the amount of available refunds to spend. The average gas price has increased by $1 per gallon since the last week of February to $3.98, according to AAA.
