Trump's $65 Billion Tax Refund Windfall: Benefits for the Wealthy

Feb 8, 2026, 2:32 AM

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The US economy is poised for a significant fiscal boost this tax season, as Bank of America Global Research (BofA) analysts forecast a remarkable increase in tax refunds driven by the One Big Beautiful Bill Act (OBBBA). This legislation is expected to deliver a $65 billion injection compared to last year, though the benefits are predicted to be unevenly distributed, potentially exacerbating the nation's existing "K-shaped" economic divide.

BofA projects that tax refunds in 2026 will be approximately $65 billion higher than in 2025, marking an 18% year-over-year increase. The overall consumer stimulus from the OBBBA is estimated to range from $135 billion to $140 billion. However, the structure of these tax breaks, particularly changes to the state and local tax (SALT) deduction caps, indicates that middle- and higher-income households will largely benefit from this initiative.

The Widening 'K'

BofA's analysis highlights a persistent "K-shaped" dynamic in the economy, where the financial fortunes of wealthier households sharply diverge from those of lower-income Americans. In late 2025 and early 2026, spending by higher-income households is projected to rise by 2.4%, while lower-income households will only see a modest growth of 0.4%. Aditya Bhave, a senior US economist, warns that these spending disparities are likely to become "more pronounced," echoing findings from the New York Federal Reserve that indicate the K-shaped economy has been evident for three years.

While the OBBBA includes deductions for tip and overtime income that benefit service workers, it also raises the SALT deduction cap, favoring higher earners disproportionately. The nonpartisan Tax Policy Center estimates that the largest cash impacts of the legislation will accrue to those with the highest incomes.

Impact on Consumer Spending

Treasury and independent estimates suggest that the typical refund in 2026 could be about $300 to $1,000 higher than last year, with some estimates centering around an average of $3,800. However, the distribution of this stimulus has critical implications for the economy. BofA indicates that higher-income households are more likely to save than spend, meaning that a significant portion of this new stimulus might not circulate through the retail economy. Wealthy recipients are "more likely to use unspent funds to buy stocks than pay down debt," limiting the immediate boost to consumer spending.

This trend is already apparent in consumer behavior, as affluent consumers continue to spend on services while more price-conscious lower-income households prioritize essential purchases over luxury items.

A Lifeline for Lower-Income Households

Despite the skew towards the wealthy, the OBBBA offers a vital lifeline to lower-income households. For these families, tax refunds represent a larger share of their average monthly spending compared to wealthier peers. Historical data shows that lower-income households tend to increase spending on goods, travel, and leisure by nearly 40% in the weeks following receipt of their tax refunds.

This stimulus arrives at a crucial time, as fourth-quarter GDP tracking for 2025 declined to 2.4%, and the economy has exhibited a "choppy" start to 2026. While the $65 billion increase in refunds is expected to provide a temporary boost to discretionary spending from February to April, BofA cautions that the long-term economic momentum will depend heavily on the labor market.

In summary, while the One Big Beautiful Bill Act promises a substantial fiscal boost to the US economy, the benefits are skewed towards higher-income households, potentially deepening existing economic disparities while offering crucial support to lower-income families during a pivotal time for the economy.

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