A change in federal tax law that decreased the take-home pay of many working Americans is impacting household budgets. According to NRF’s 2013 Tax Returns Survey conducted by BIGinsight, nearly three-quarters (73.3%) of those polled say their spending plans are taking a hit.
“We cannot grow the nation’s economy until consumers consume. A smaller paycheck due to the fiscal cliff deal early last month, higher gas prices, low consumer confidence and ongoing uncertainty about our nation’s fiscal health is negatively impacting consumers and businesses across the country,” said NRF President and CEO Matthew Shay.
“Every day we hear about building the middle class. We can only do that if we tear down barriers that prevent consumers from investing their hard-earned money back into our nation’s economy. It’s really that simple.”
When asked how the new federal tax laws have affected spending, saving or budgeting of their households, nearly six in 10 (58.2%) of those polled say their plans have been either somewhat or greatly impacted.
Specifically, nearly half (45.7%) say they will spend less overall, and 35.6 percent will watch for sales more often. Additionally, one-third (33.5%) will reduce how much they dine out and 24.5 percent will spend less on “little luxuries,” such as trips to coffee shops, manicures and high-end cosmetic items.
Of those greatly impacted, nearly half (49.2%) will delay major purchases, such as a car, TV or furniture, and 58.2 percent will reduce the amount they dine away from home; another 43.4 percent say they will contribute less to savings, 46.4 percent will comparison shop more often, and 54.4 percent will spend less on clothing.
Of individuals that say the paycheck decreases will have little to no impact, many will still alter their spending habits. According to the survey, of this group, 22.4 percent say they will spend less overall, and 15.8 percent will use coupons more often. An additional 11.1 percent will reduce their entertainment plans, 11.6 percent will cut back on vacation and travel plans, and 17.9 percent will watch for sales more often.
Half of those making less than $50,000 will spend less overall
The survey found that half (50.0%) of those who make less than $50,000 a year say they will spend less overall. Additionally, 23.2 percent will spend less on groceries, compared to 16.7 percent of consumers who make more than $50,000 a year, and 27.6 percent will shop at discount stores more often, compared to 19.7 percent of adults making more than $50K.
Many Americans have already filed their taxes; most adults will put refund in savings
According to the survey, tax season is in full swing; three in 10 Americans (29.2%) say they have already filed their returns as of February 13 and another 29.2 percent will have filed by the end of the month. More than one-quarter (27.4%) will file in March and 14.2 percent will wait until the deadline and file in April.