The U.S. economy is heading into tax season with a sizable jolt of cash on the way. Bank of America Global Research analysts expect a sharp jump in tax refunds tied to the One Big Beautiful Bill Act (OBBBA), estimating the change could inject about $65 billion more into households than last year.
The boost could help support spending during a choppy start to 2026 — but analysts warn the gains won’t land evenly. Instead, they could intensify the country’s “K-shaped” split, where higher-income households pull further ahead while lower-income families struggle to keep up.
A $65 billion refund surge
Bank of America Global Research projects that 2026 tax refunds will be roughly $65 billion higher than 2025, an 18% year-over-year increase. In total, the bank estimates the OBBBA could deliver $135 billion to $140 billion in consumer stimulus.
But how the tax changes are structured matters. Analysts say many of the biggest benefits are likely to flow to middle- and higher-income households, especially due to adjustments involving state and local tax (SALT) deduction caps.
The widening “K”
BofA’s work points to a familiar pattern: the post-2025 economy is increasingly “K-shaped,” with spending and financial resilience diverging sharply by income.
In late 2025 and early 2026, higher-income household spending rose about 2.4%, while lower-income spending increased only 0.4%. Senior U.S. economist Aditya Bhave argued that the new policy could make that divergence “more pronounced,” adding that the consumer divide is poised to deepen.
The bill does include deductions tied to tip and overtime income, which can help many service and hourly workers. But critics note that raising the SALT deduction cap tends to benefit higher earners disproportionately. Independent estimates have suggested the largest cash gains will accrue to those with the highest incomes.
How big could refunds get?
New projections from Treasury and outside analysts suggest the typical 2026 refund may be $300 to $1,000 higher than last year, depending on the taxpayer — with some estimates clustering around roughly $3,800 on average.
Wall Street vs. Main Street: where the money goes
The impact of this stimulus depends on what households do with the money.
BofA notes that higher-income families are more likely to save rather than spend — meaning a meaningful slice of the cash could bypass day-to-day retail activity altogether. Analysts estimate that about half of the stimulus may not immediately flow into the consumer economy. Instead, unspent funds among wealthier recipients may be more likely to head toward stocks rather than debt paydown.
That split already showed up in 2025: affluent consumers largely maintained spending on services, while many other households grew more price-sensitive, focusing on smaller purchases and pulling back on big-ticket items like electronics and furniture.
A real lifeline for lower-income households
Even if the overall distribution skews upward, tax refunds can matter most for families on tighter budgets.
BofA data indicate refunds represent a much larger share of monthly spending for lower-income households than for wealthier ones. That means this group — even with smaller dollar gains — may drive a disproportionate share of any near-term consumption bump.
Historically, lower-income households often use refunds quickly, boosting spending on goods, travel, and leisure by nearly 40% in the weeks after receiving the money.
A timely boost — but not a long-term fix
The timing is important. BofA points to softer growth signals: fourth-quarter GDP tracking for 2025 has slipped to about 2.4%, and early 2026 has been uneven. The increase in refunds could support discretionary spending between February and April, but BofA cautions that the bigger question for sustained momentum is the labor market.
In other words: tax season may deliver a noticeable pop — but whether it turns into lasting strength will depend on jobs, wages, and how broadly economic stability is shared.
