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Source: Fortune.com
Summary
Bank of America Research analysts predict a $65 billion increase in tax refunds this year due to the “One Big Beautiful Bill Act” (OBBBA), but benefits will be unevenly distributed, potentially exacerbating the “K-shaped” economic divide. The legislation is expected to give the economy a $65 billion shot in the arm, with total consumer stimulus ranging from $135 billion to $140 billion. Middle- and higher-income households will likely reap most of the benefits, while lower-income households will see smaller gains.
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The announcement sounds familiar.
Bank of America’s analysis highlights the persistent “K-shaped” dynamic in the post-2025 economy, where the financial fortunes of the wealthy diverge sharply from those of lower-income Americans. Higher-income households are projected to see a 2.4% increase in spending, while lower-income households will see only 0.4% growth.
Middle- and higher-income households are expected to be the biggest beneficiaries of this policy, with the typical 2026 refund potentially being roughly $300-$1,000 higher than last year. However, the bill’s structure, particularly changes to the SALT deduction caps, suggests that higher earners will benefit more.
As a result, about half of this new stimulus might never reach the retail economy, with unspent funds from wealthy recipients more likely to be used to buy stocks than pay down debt.
The “K-shaped” economy will only continue to widen, with the consumer divide set to get deeper, according to Bank of America’s senior U.S. economist Aditya Bhave.
Original observation: As the stimulus flows through the economy, expect the wealthy to continue to pull ahead, while lower-income households struggle to keep pace.
