A majority of consumers say they are making adjustments to their spending following the end of payroll tax cut. A poll of 5,185 consumers was conducted from February 5-13 with a margin of error of 1.4 percentage points. It was designed to gauge consumer behavior and shopping trends that are related to tax returns.
According to the National Retail Federation’s tax survey, conducted by BIGinsight, more than 70 percent of those asked in a recent survey said their spending plans are taking a hit following the end of the tax cut, which was not renewed as part of the so-called “fiscal cliff” deal in January.
The change in spending plans is also related to a sharp rise in gas prices. The National Retail Federation President and CEO, Matthew Shay, said “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.”
When asked how the new federal tax laws have affected the spending, saving or budgeting of their households, 58.2 percent of those polled say their plans have been either somewhat or greatly impacted. Specifically, 45.7 percent say they will spend less overall, and 35.6 percent will watch for sales more often.
The survey showed that to make up for the difference in take-home pay, more than 33 percent will dine out less and won’t stop at the coffee shop or get manicures as often. Almost half of those asked (49.2 percent) plan to delay major purchases, such as a car, TV or furniture, while 43.4 percent say they will contribute less to savings, and 54.4 percent will spend less on clothing.
The survey found that exactly half of those who make less than $50,000 a year say they will spend less overall.
The survey found nearly two-thirds of consumers are expecting a tax refund this year — 37.2 percent use their refund to pay down debt, 44 percent will put it into savings and 29.7 percent will use it for everyday expenses. When looking specifically at the group whose spending plans have been greatly affected by payroll tax changes, 48.1 percent of those expecting a refund say they will pay down debt and 40.2 will put their refund toward savings.
When it comes how people are filing their taxes, the number of people who file online continues to increase. Up from 60.7 percent last year, this year 62.5 percent of taxpayers will file their taxes online. Additionally, 37.3 percent will prepare their taxes using computer software, 20.2 percent will use an accountant, 18.8 percent will use a tax preparation service and 14 percent will prepare by hand.
To discover how we can help you, please give us a call at 401-254-0151. We look forward to hearing form you.