Hi! I hate to ruin your Friday, but there are just two more weekends left to file your taxes. Not to worry, this newsletter has everything you need to know for this season, including new deductions, red flags for AI scams and even tips to keep yourself from procrastinating on personal finance tasks like this.

But hey, maybe you’re more responsible than me and already filed. We still have a lot you might find interesting, like the numbers on how much billionaires pay in taxes and how much rising gas prices will offset this year’s refunds, which are tracking higher. TGIF! — Tony Wagner, newsletter editor

Tax refunds are tracking about $60 billion higher than to last year. 

“And the average refund so far has been something like $3,600 per claiming,” said aid Michael Pearce, chief U.S. economist at Oxford Economics. “So that’s up about 10% or 11% from year-ago levels.”

But those tax benefits start to look a little slimmer when you factor in rising gas prices.

 

“An increase in gasoline prices, driven by this war, is essentially a new tax on consumers. So one way of thinking about it is this is offsetting some of the benefits that are coming from this tax cut bill,” Pearce said.

 

Those benefits will be completely offset if gas prices average around $3.60 a gallon over the course of this year, he added. Right now, gas prices are around $4 a gallon nationally — a three-year high and a psychological tipping point.

 

“If they remain there for the rest of the year, then we’re going to see that the increase in gas prices more than offset any boost to consumer spending from these tax refunds,” Pearce said.

 

That said, another way of looking at this is that the bigger refunds are helping people afford to spend more on gas. “It provides some cushion to this energy shock. Otherwise, the hit to consumers could be much deeper,” said Kathy Bostjancic, chief economist at Nationwide.

 

The problem with that argument is that people basically have to spend more money on gas right now, she said.

“My gasoline prices went up, so all of the extra money I got from the refunds is going into the gas tank instead of going out to dinner, or buying a gift, or going on vacation — things like that,” Bostjancic said.

 

Not every consumer is going to cut back.

The top tax rate may be 37%, but loopholes and deductions in our tax system mean that the wealthiest Americans pay far less than they’re expected to.

“When it comes to the wealthiest folks, what you see is, yes, they're paying more tax than the poorest folks. But are they paying as much tax as they could pay to help run the country the way that we run it? And the answer to that is probably not,” said Anthony Infanti, a law professor at the University of Pittsburgh. 

The top 1% paid an average tax rate of more than 26% in 2022, while the top 5% paid 23% and the top 10% paid more than 21%. Meanwhile, the bottom 50% paid a rate of almost 4%, according to the Internal Revenue Service. But a ProPublica study looking at the 25 wealthiest people in America found that they only paid a tax rate of 3.4% between 2014 and 2018. 

The tax burden within each percentile group ranges greatly, according to a 2024 study from the Yale Budget Lab, a nonpartisan policy research center. The top 1% of earners pay an effective tax rate between 3% and 45%, the study found. An effective tax rate is the amount that taxpayers actually pay after factoring in deductions, credits and exemptions, while the statutory tax rate is the legally required percentage each tax bracket is supposed to pay. 

Higher-income earners are more likely to pay a lower tax rate than their statutory rate. Ninety-five percent of Americans earning more than $578,000 paid taxes that were lower than their expected rate, while only 25% earning less than $11,000 paid less than their expected rate, according to the Yale Budget Lab.

That's because higher earners benefit from provisions in the tax code, like the mortgage interest deduction, which allows homeowners to deduct the mortgage interest they paid on the first $750,000 of their mortgage debt. Those who make income above $250,000 can also skirt the 3.8% net investment income tax if they own and are employed by certain businesses. 

Eliminating the provisions that lead to lower effective tax rates would raise $560 billion this year.

To address budget gaps, states are relying on a familiar rallying cry: Tax the rich.

Washington Gov. Bob Ferguson did just that, signing into law a new 9.9% tax on residents earning more than $1 million this week, and lawsuits are already brewing to challenge it.

Washington relies heavily on sales and property taxes instead of an income tax, said Christina Lewellen, an associate professor of accounting at North Carolina State University. That puts a heavy burden on low-income individuals, and this new tax is meant to distribute the load a bit more evenly.

Other states have implemented “millionaire taxes,” including California, Massachusetts and New Jersey.

Some states, like California and Illinois, are now proposing a one-time “billionaire tax” on the unrealized gains of billionaires. Unrealized gains are the profits you’ve accrued in stocks or other investments that you have yet to sell. These taxes aim to address funding shortfalls in areas like transportation and health services.

While both millionaire and billionaire taxes could help reduce state budget deficits and fund state programs, they could cause some high-earning or high-net-worth individuals to leave for other states, experts told Marketplace.

The experts that Marketplace spoke to have mixed views on which tax model would be more beneficial, with some saying that the best way to generate revenue is to reform our federal tax system instead of focusing on state taxes.

Listen to “Taxes” on YouTube | Apple Music | Spotify

There are more than a few songs about taxes. You’ve got the classics by the Beatles, Billy Joel and Johnny Cash, and more recent cuts from 2 Chainz and J. Cole, but for my money there’s nothing like this single from Geese’s 2025 album “Getting Killed.”

It’s a song about not wanting to pay up, like the rest, but it also captures the ecstatic release I feel when I finally get them over with.