With the recent tax law changes, tax refunds are expected to increase significantly next spring for many Americans, meaning several more car shoppers will be heading to local lots.
During its recent Manheim Used Vehicle Value Index call, Cox Automotive shared its expectations for tax refunds to grow by about $750 to $4,050 for 2026. Some states, Vermont and Hawaii, are expected to see returns increase by $1,200.
TaxMax President and CEO Bill Neylan said the changes in the One Big Beautiful Bill signed into law July 4 could put even more money back into the pockets of consumers, and dealers need to start preparing. TaxMax and NIADA will hold a webinar 2 p.m. Oct. 29 to discuss the implications of the tax changes.
“We expect refunds to be even higher, and I will go into depth on our webinar on the reasons why,” Neylan said. “We expect refunds for those who make under $60,000 to be in the $6,000 to $10,000 range.”
The new tax law increased the standard deduction and child tax credits and took away taxes on tips and overtime. For consumers still battling inflation in the market, Neylan points out that the increased returns will be beneficial for car shoppers.
“The upcoming tax season is being labeled by many nationwide as the next big stimulus to taxpayers and the economy and consumers are already spending these refunds now,” Neylan said.
He urged dealers to start planning for tax season now to take advantage of the market.
“All dealers (Retail, BHPH, LHPH, Franchise) should find a tax season partner to make sure they can take advantage of this one-time-a-year event,” Neylan said. “This tax season will come fast and will be furious. If a dealership is planning on doing the status quo, they are for sure going to miss out, and it can cost them tens, if not hundreds of thousands of dollars. A dealer should have a strategy for sales, a separate strategy for down payments, another strategy for collections if BHPH, and a focused strategy for advertising and marketing.”
NIADA Director of Government Relations and Compliance Patrick O’Brien will moderate the webinar with Neylan. Register for the webinar here.
