Since the US Supreme Court ruled that the International Emergency Economic Powers Act (IEEPA) did not grant the president tariff authority, the federal government has repaid about $21 billion as of May 31 to the businesses that paid those levies. But economists generally view tariffs as burdening all US residents, not just importers or purchasers of tariffed goods, through increases in prices and reductions in income.
Consumers and lawmakers rapidly reacted to the Supreme Court ruling. Consumers filed lawsuits against large corporations demanding their share of IEEPA refunds, and several lawmakers have introduced bills demanding that rebates go to all US families.
In a new report, we show that families' real after-tax income declined, on average, by $1,250 as consequence of the IEEPA tariffs. We then examine four options for a tax credit to help offset families' burden from the IEEPA tariffs. The options vary by the maximum amount of the credit and income eligibility rules, offsetting between 50 and 90 percent of the burden.
Who is entitled to refunds?
The Supreme Court did not address whether businesses or families should receive refunds of the IEEPA tariffs. But within two weeks, the US International Trade Court ordered the government to repay the IEEPA tariffs to the businesses that paid the levies when the goods entered the country. The government is partially complying with this decision while appealing whether refunds are due to all payers.
The courts’ rulings have not stopped a wider debate over who should receive refunds of IEEPA tariffs. FedEx and UPS have been sued by consumers seeking repayment of IEEPA tariffs directly charged to their deliveries. Costco and Nintendo customers are asking for compensation for tariff-driven price hikes on purchases. Senator Martin Heinrich (D-New Mexico) and Representative Henry Cueller (D-Texas) introduced legislation that would provide families with refundable tax credits to offset the IEEPA tariff burden.
Notably, Heinrich would still allow importers to receive the Court-ordered refunds. Providing refunds to both importers and families would sidestep the challenging question of who deserves the refunds but would substantially increase the costs of a refund program.
How would tariff credits offset families’ burdens?
We calculated the IEEPA tariff burden as the reduction in the inflation-adjusted value of families’ after-tax income. On average, that was $1,250 during 2025 and early 2026. The size of the burden ranged from $230 among families in the lowest-income quintile to $4,430 among those in the top quintile.
We considered four options that would offset the IEEPA tariff burdens, with amount of the credit at the same level across families with similar income and demographic characteristics (Figure 1).
FIGURE 1
Option 1. The maximum credit amount would be $700 for unmarried filers (roughly the average IEEPA burden for single filers) and $1,400 for married couples. The credit would be increased by $350 for one dependent and $700 for two or more dependents. If all families were eligible, the average credit would be $1,090, offsetting 87 percent of the average IEEPA tariff burden.
Option 2. Phasing out, or reducing the credit, when income exceeded $75,000 ($150,000 for married couples filing jointly) would reduce the average credit to $830, with about 18 percent of families ineligible for the payment. On average, that credit would offset about two-thirds of the IEEPA tariff burden.
Both those options overcompensate families, on average, in the lower two income groups and undercompensate those in the top two income quintiles. For example, the average IEEPA burden was $530 for families in the second income quintile, but their average credit would be $970 under either option. In contrast, the average credit for families in the top quintile would be $1,530 and $180 under the first and second options, respectively, but their average IEEPA burden was $4,430.
We considered two alternatives that would reduce the amount of overcompensation.
Option 3. If the credit in option 2 initially increased as income rose, with the maximum credit reached when family income is $35,000 ($70,000 for joint filers), the average credit for all families would drop to $570 (offsetting about 46 percent of the IEEPA burden) and 29 percent of families would not receive any credit. In the second quintile, the average would be reduced to $660. However, the phase-in range would prevent about one-third of families in the bottom quintile from receiving a credit.
Option 4. The maximum credit could be set at $400 for unmarried filers (about the average IEEPA tariff burden for single filers in the second quintile) and $800 for married couples. The average credit would be roughly the same as in the third option, but all families would be eligible. However, with no phase-in or phaseout range, families in the second quintile would receive an average credit of $520 and families in the top quintile would receive an average credit of $800.
If families bear the burden of tariffs, then it may be appropriate for them to receive refunds of the unconstitutional IEEPA tariffs. Just as the impact of tariffs is passed on to families, refunds received by importers could ultimately be passed on to families. But refunds to businesses are being delayed due to processing challenges and litigation. Our report provides lawmakers with alternative ways to alleviate families' tariff burdens.
