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.
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. 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.
Even individuals who say the paycheck decreases will have little to no impact will spend less (22.4 percent) overall and 15.8 percent will use coupons more often.
Half (50.0%) of those who make less than $50,000 a year say they will spend less overall, spending less on groceries (23.2 percent) and shopping at discount stores more often (27.6 percent).
Nearly two-thirds (65.8%) of consumers are expecting a refund from Uncle Sam this year. More than one-third (37.2%) say they will use the money to pay down debt, 44.0 percent will put it into savings, and 29.7 percent will use it for everyday expenses.
“Americans are extremely mindful of how they spend their hard-earned money these days, and that includes any refund they may get back from their taxes,” said BIGinsight Consumer Insights Director Pam Goodfellow. “Families will adjust to the changes in their take-home pay by purchasing generic brands, searching for coupons, downgrading on services like cable and internet and re-evaluating their overall spending habits.”
“We cannot grow the nation’s economy until consumers consume,” 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.”
The NRF 2013 Tax Returns survey, conducted for NRF by BIGinsight, was designed to gauge consumer behavior and shopping trends related to tax returns. The poll of 5,185 consumers was conducted from February 5-13, 2013. The consumer poll has a margin of error of plus or minus 1.4 percentage points. Download complete survey results.