In celebration of Financial Literacy Month, Kyle Hulehan and Zoe Callaway revisit the Tax Foundation’s 2024 National Tax Literacy Poll in a new episode of The Deduction. The second half of the episode’s title says it all: “The Numbers Are Alarming.” Links, and a few reasons not to worry, below the fold.
There’s no question that many Americans need better tax education. It’s also not surprising that “most Americans are confused by and dissatisfied with the federal tax code“—a sentiment that likely holds after the One Big Beautiful Bill Act’s enactment in July 2025. But U.S. taxpayers are a discerning bunch, and it’s a mistake to dismiss their views as uninformed rather than reflective of their lived experiences and pragmatic wisdom. More broadly, the Tax Foundation’s data implicate broader questions about what tax literacy is, as well as how we should evaluate it.
For example, the Tax Foundation’s poll finds that 52% of Americans either agree or are unsure that “large tax refunds are a good thing,” with a sharp preference for large tax refunds among lower-earning households. Those answers are conventionally coded as wrong, given the time-value costs of overwithholding. But for many Americans, the forced savings element of tax refunds may function as a low-effort liquidity-management mechanism. Or refunds may come from refundable credits, such as the EITC or CTC, both of which have slightly different economic implications and time-value costs than wage overwithholding. Bigger refunds also might arise from mid-year changes in law (ahem), which makes the true-up in tax liability less like an interest-free loan to Treasury and more like an absolute (but deferred) change. Often, there’s not a single—or simple—”correct” answer to complex tax questions.
Moreover, the Tax Foundation highlights that 71% of Americans support lowering top marginal rates, while 54% want high-earning households to pay more tax. This longstanding tension frequently is cited as one of the many peculiarities of Americans’ relationship to their tax system. In light of the United States’ rich history of tax gaming, especially among wealthy taxpayers and large businesses, this tension makes sense—and aligns with economists’ conventional prescriptions for tax reform. Broaden the base (maybe by cabining tax avoidance), and lower rates. Popular intuitions may not be highly theorized, but they are worth deeper exploration and serious consideration. If Americans really are talking about the distribution of tax burdens (setting aside base-rate interactions), that’s pretty sophisticated.
Finally, the Tax Foundation finds clear evidence of Americans’ dissatisfaction with the U.S. tax system: its complexity, the need for reform, and perceived mismatches between tax burdens and government benefits. These views probably haven’t changed post-OBBBA, and they also resonate with academic and expert commentary. This alignment raises bigger questions of how tax literacy should be evaluated. Is the goal to produce a common body of tax facts, specific intuitions about systemic operation, or a certain degree of personal savvy when filing returns? To some extent, people will take their own paths in developing an understanding of a tax system that reaches nearly every aspect of daily life, and respecting these personal pathways is an important part of the tax literacy project.
Overall, the Tax Foundation’s poll and podcast uncover a bunch of persistent (and well-traveled) misconceptions about marginal versus average rates and deductions versus credits, among other things. These misconceptions matter. So do context, intent, and nuance—which survey data can flatten. More broadly, it’s hard to assess quantitative taxpayer attitudes without some triangulation involving robust and open-textured qualitative data. Tax literacy is more than an assessment of textbook answers. It’s also a test of whether experts understand why taxpayers experience the system the way they do.
Zoe Callaway, Kyle Hulehan & Dan Carvajal, Is America Financially Illiterate? The Numbers Are Alarming, The Deduction (Podcast) (Apr. 29, 2026):
Most Americans don’t understand how the tax code works, and it’s costing them. In this episode of The Deduction, host Kyle Hulehan sits down with Zoe Callaway, VP of Education at Tax Foundation, to talk about tax and financial literacy in America.
They dig into the results of Tax Foundation’s national survey on tax literacy, the most stubborn misconceptions people have about taxes (including one that nearly made a teacher turn down her own promotion), and what’s happening in high school classrooms across the country. They also connect everyday tax confusion to bigger policy questions, from tariffs to tax refunds.
