Seven in 10 Americans Adjusting Spending Plans to Cope with Recent Payroll Tax Changes, According to NRF
Washington, February 21, 2013 – 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.
Unsurprisingly, of those who say the payroll tax changes have had a great impact on their spending and budget plans, three in 10 (31.1%) have already filed.
The survey found nearly two-thirds (65.8%) of consumers are expecting a refund from Uncle Sam this year, and when asked how they plan to spend their refund, 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.
Looking at the group whose spending plans have been greatly impacted by payroll tax changes - a hefty 48.1 percent of those expecting a refund say they will pay down debt, and 40.2 will put their refund towards savings.
“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. “Thanks to years of practice stemming from high gas and food prices, and an uncertain economy, 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.”
Online tax preparation grows, most will use computer software to file taxes
When it comes to how Americans will file their taxes, the number of people who file their taxes online continues to increase. This year, 62.5 percent of U.S. taxpayers will file their taxes online, up from 60.7 percent last year and the most in the survey’s history. 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 14.0 percent will prepare by hand.
About the Survey
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.
BIGinsight delivers executives timely, consumer-centric insights from multiple sources. As a comprehensive resource of information, BIGinsight represents the voice of the consumer and provides knowledge to marketers regarding consumer views on the economy, personal finance, retail, lifestyle, media and domestic and world issues. www.BIGinsight.com
As the world’s largest retail trade association and the voice of retail worldwide, NRF represents retailers of all types and sizes, including chain restaurants and industry partners, from the United States and more than 45 countries abroad. Retailers operate more than 3.6 million U.S. establishments that support one in four U.S. jobs – 42 million working Americans. Contributing $2.5 trillion to annual GDP, retail is a daily barometer for the nation’s economy. NRF’s Retail Means Jobs campaign emphasizes the economic importance of retail and encourages policymakers to support a Jobs, Innovation and Consumer Value Agenda aimed at boosting economic growth and job creation. www.nrf.com.