The U.S. economy is bracing for a massive fiscal injection this tax season Bank of America Research analysts expect tax rebates to increase significantly under the OBBBA Act. While the legislation is expected to inject $65 billion into the economy compared with last year, analysts believe the benefits are unevenly distributed and could exacerbate the country’s “K-shaped” economic divide.
Bank of America Global Research shows that the amount of tax refunds in 2026 is expected to increase by approximately $65 billion compared with 2025, a year-on-year increase of 18%. The bank estimates OBBBA’s total consumer stimulus will be between $135 billion and $140 billion. However, the structure of these tax breaks, particularly changes to the cap on the state and local tax (SALT) deduction, suggests that middle- and upper-income households will receive most of the benefits.
widened “K”
Bank of America’s analysis highlights the continued “K-shaped” dynamics of the post-2025 economy, where the financial fortunes of the wealthy diverge significantly from those of lower-income Americans. Spending by high-income households increased by 2.4% in late 2025 and early 2026, while spending by low-income households increased by only 0.4%.
Senior U.S. economist Aditya Bhave said middle- and high-income households should be the biggest beneficiaries of the policy, predicting that “K-shaped” spending dynamics may become “more pronounced.” The economists’ report follows findings from a survey earlier this week. New York Fed Evidence of the K-shaped economy goes back three years. “The divide between consumers is about to get deeper,” Barfe added.
While the bill includes deductions for tips and overtime earnings (which benefits service workers), it also increases the cap on SALT (state and local tax) deductions, a policy that disproportionately benefits higher earners. The nonpartisan Tax Policy Center estimates the legislation would have the largest cash impact on the highest income earners.
Financial and independent estimates Current project Typical refunds in 2026 are likely to be about $300 to $1,000 higher than last year, with some estimates averaging around $3,800.
Wall Street and Main Street
The distribution of this stimulus has significant implications for how money moves through the economy. Bank of America notes that higher-income households are more likely to save than spend. As a result, about half of the new stimulus may never reach the retail economy. In contrast, wealthy recipients’ unspent funds “are more likely to be used to purchase stocks rather than pay down debt.”
This trend is already showing up in consumer behavior. Throughout 2025, affluent consumers maintained spending on services, while the broader consumer segment became increasingly price-sensitive, prioritizing smaller items and reducing purchases of larger items such as electronics and furniture.
A lifeline for low-income people
Although skewed toward the wealthy, OBBBA does provide a vital lifeline to low-income families. For these households, the tax refund represents a much larger share of their average monthly expenses than for wealthier households, meaning most of the economy’s growth will come from this group, according to Bank of America data.
Another analysis from the Bank of America Research Institute said that “even if the refund grows fairly evenly… it could still boost spending by low-income households and take pressure off their discretionary ‘nice-to-have’ spending budgets.” Historically, low-income households have used rebates to increase spending on goods, travel and leisure by nearly 40% in the weeks after receiving the rebate.
The stimulus comes at a critical time. The institute said GDP growth had slowed to 2.4% in the fourth quarter of 2025, and the economy had an “unstable” start to 2026. While an additional $65 billion in refunds will temporarily boost discretionary spending between February and April, Bank of America warned that long-term economic momentum still depends on the labor market.
For this story, wealth Journalists use generative AI as a research tool. Editors verified information for accuracy before publication.