This year, your tax refund might be larger, but Trump's war with Iran could "eat up" that money.

U.S. President Donald Trump has repeatedly promised that, thanks to his “big, beautiful bill,” Americans will get a bigger tax refund this year.

But now, the war he has launched against Iran—and the resulting spike in oil prices—could significantly cut back many people’s unexpected windfall, with the impact depending on how long the conflict in the Middle East lasts.

There’s no question that, thanks to the broad package of major tax cuts in Trump’s domestic agenda, many taxpayers are enjoying larger refunds this year. These measures include raising the standard deduction, eliminating taxes on tips and overtime pay, and increasing the deduction amounts for seniors.

Based on the latest data from the Internal Revenue Service as of March 6, the average refund this year is about $350 higher than last year, an increase of nearly 11%. Ericka York, vice president of federal tax policy at the conservative think tank Tax Foundation, said this figure may change before the April 15 tax filing season ends, but refunds typically level off after late February.

At a congressional hearing on March 4, IRS Commissioner Frank Bisignano said that for taxpayers claiming new deductions for seniors, tip income, overtime pay, and car-loan interest, the average refund increased by $775. It is expected that by the end of the tax filing season, this number will rise to $1,000.

However, as this extra income arrives, many people are facing even greater strain at the gas station. The national average price for gasoline has jumped to $3.91, up $0.93 per gallon since Feb. 28, when the U.S. and Israel went to war with Iran.

“If you get an extra $300 or $500 in your refund, but that money quickly has to be used to pay for higher gas prices and the higher prices of everything else—because gas and oil prices affect everything—then you probably don’t feel any more well-off,” York said.

She added, “The relief from the refund may not produce the political windfall that Republicans and Trump are hoping for.”

$4.5 billion more spent on gasoline

Over the past three weeks, oil prices have surged rapidly. The Strait of Hormuz between Iran and Oman has effectively been blocked, cutting off 20% of the world’s oil supply and driving oil prices sharply higher. It is still unclear when this war— and the attacks on the Middle East energy hub—will end.

Patrick DeHaan, head of petroleum analysis at online fuel price tracker GasBuddy, said that households with two cars are spending on gasoline each week an average of $20 to $40 more than before the outbreak of the conflict.

Viewed overall, the number is staggering. DeHaan estimates that since Feb. 28, when oil prices spiked, U.S. drivers have already spent nearly $4.5 billion more at the pump.

“This money could have gone to other parts of the economy, but Americans are spending it at gas stations,” he said.

Scott Hoyt, a senior director at Moody’s Analytics, said that if oil prices break above $4 per gallon and stay there for six months, fuel spending for a typical household would increase by about $600 during that period. Because higher oil prices also push up the prices of other goods, total household spending would rise by $750.

He noted that the surge in oil prices hits lower-income Americans harder, because they spend a higher share of their household budgets on energy. And these people are also more dependent on refunds to cover day-to-day expenses.

In a statement to CNN, a White House spokesperson, Cush Desay, acknowledged that “Operation Epic Rage” will bring “temporary chaos.” At the same time, “the Trump administration remains focused on the domestic agenda that has been proven for the president—deregulation, tax cuts, and increasing energy supply.”

To pay for gas, you have to economize

Alice is an administrative assistant who is already living paycheck to paycheck. With Trump and other Republicans constantly talking about how “great” the tax filing season is, she had been hoping to get more tax refunds this year.

The Oklahoma resident not only hasn’t seen her refund increase—she’s also spending an extra $15 per week on gas now. When she filled up on Sunday, gas was $3.29 per gallon, 80 cents higher than at the end of February.

Alice, in her early 60s, asked that her last name not be used to avoid affecting her job. She needs to use her refund to pay property taxes. So she plans to cut back on food and electricity bills, sell some personal items, and reduce the taxes withheld from her paycheck to make ends meet.

“I can only hope I can save money on food and other necessities, live extremely frugally, and then pay for the extra gas,” Alice said.

Even if the conflict in the Middle East ends, oil prices will still take time to fall. DeHaan said that “in the best days,” oil prices drop only 1 to 3 cents per day.

“If the situation is resolved, gas prices will need a few months to ‘normalize,’” he said.