Gig Work Is Making Tax Refunds Harder to Get

As the 2026 tax season unfolds, a sobering reality has emerged for the nearly 70% of Americans living paycheck to paycheck. While many U.S. consumers view a tax refund as a significant financial windfall or an opportunity to bolster savings, those facing the greatest financial strain are statistically the least likely to receive one. This “refund gap” is not merely a coincidence; it is the result of shifting economic policies, changes in the nature of work and systemic barriers that disproportionately impact those living paycheck to paycheck.

The Statistical Divide: Who Gets a Refund?

According to “Tax Refund Season Reveals the Reality of Paycheck-to-Paycheck America,” the newest installment of the PYMNTS Intelligence exclusive series New Reality Check: The Paycheck-to-Paycheck Report, approximately 55.8% of all U.S. consumers received a refund for the 2024 tax year. However, this figure masks a significant disparity based on financial lifestyle. Consumers living paycheck to paycheck, particularly those doing so out of necessity, are notably less likely to see money back from the IRS. Specifically, only 48.9% of those living paycheck to paycheck by necessity received a refund, compared to 62.1% of those who live paycheck to paycheck by choice.

PYMNTS data shows that income level is the most consistent predictor of this outcome. Only 41.3% of consumers earning less than $50,000 received a refund last year, whereas more than 60% of those in every income bracket above $50,000 received one.

Structural Hurdles: Policy Shifts and the Gig Economy

The declining likelihood of receiving a refund appears to be driven by several structural factors. The elimination of COVID-related tax credits, such as the expanded Child Tax Credit and the recovery rebate credit, has had a profound impact on low-income filers. As these relief efforts phased out, TurboTax noted that the rate of refunds for the lowest income bracket plummeted from 74.8% in 2021 to 57% in 2024.

Another significant factor in the declining refund rate is the growing prevalence of gig jobs. Many paycheck-to-paycheck consumers now earn income through platforms like Uber, DoorDash, or other platforms where workers are categorized as independent contractors rather than full employees. In this case, taxes are not automatically withheld from paychecks. Instead, workers are required to make quarterly estimated tax payments; when they fail to do so, the difference comes out of their annual refund, which often results in the filer owing the IRS instead.

Lastly, there have been structural changes in the withholding system itself. The first Trump administration revamped the system in 2017 with the reported goal of reducing refunds. This shift intended to get withholding closer to actual liability, which is often contrary to the preferences of taxpayers who prefer the windfall of a large tax return.

Survival vs Growth: The Impact on Livelihood

For paycheck-to-paycheck consumers who do receive a refund, the money serves a vastly different purpose than it does for the financially stable. For the average consumer, a refund is a tool for wealth building: PYMNTS Intelligence found that 58.5% of those not living paycheck to paycheck use their refund for savings or investments.

In contrast, paycheck-to-paycheck consumers use their refunds as a temporary lifeline for survival. Among those struggling to pay bills, 43.2% spent their last refund on everyday expenses or bills, and 21.7% used it for debt repayment. For these households, the refund functions as a short-term income boost rather than an opportunity to improve long-term financial health. When these consumers are deprived of a refund, they lose their primary mechanism for catching up on past-due obligations, further entrenching them in a cycle of financial necessity.

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