Trump Boosts U.S. Economy with $65 Billion Tax Refund for Wealthy, BofA Reports

The U.S. economy is set to experience a significant boost this tax season, with analysts from Bank of America (BofA) forecasting a substantial increase in tax refunds. This surge is attributed to the One Big Beautiful Bill Act (OBBBA), which is expected to inject about $65 billion into the economy compared to the previous year.

Projected Tax Refund Growth

According to BofA Global Research, tax refunds in 2026 are anticipated to be around $65 billion higher than in 2025, marking an 18% increase year-over-year. This increase will contribute to a total consumer stimulus estimated between $135 billion and $140 billion.

Uneven Distribution of Benefits

However, the benefits of this legislation may not be equitably distributed. Changes to the state and local tax (SALT) deduction caps are likely to favor middle- and higher-income households disproportionately. The widening economic divide, characterized as a “K-shaped” recovery, indicates that the financial situation of wealthier Americans is diverging from that of lower-income individuals.

Consumer Spending Trends

• In late 2025 and early 2026, spending among higher-income households rose by 2.4%.
• Lower-income households, in contrast, only saw a 0.4% increase.

Aditya Bhave, a senior U.S. economist, predicts that this “K-shaped” spending trend may intensify. Recent analysis from the New York Federal Reserve supports this view, highlighting a consumer divide that has persisted for three years.

Impact on Tax Refunds

The upcoming tax legislation includes new deductions that could benefit service workers but raises the SALT deduction cap, thereby benefiting affluent earners significantly. The Tax Policy Center estimates that the largest cash impacts of the OBBBA will be observed among high-income individuals.

Typical Refund Estimates

Estimates from the Treasury indicate that typical tax refunds in 2026 may be $300 to $1,000 higher than the previous year, with averages around $3,800.

Wall Street vs. Main Street

The distribution of this stimulus has crucial implications for economic circulation. Higher-income households tend to save more rather than spend, which means a significant portion of the new stimulus could remain unspent. Funds from wealthier recipients are more likely to be allocated to investments rather than consumer goods.

Lifeline for Lower-Income Households

Despite a tilt toward wealthier citizens, the OBBBA could provide essential support for lower-income families. BofA reports that tax refunds constitute a larger fraction of their monthly expenses compared to wealthier households. Consequently, this could amplify economic activity among these families.

• Lower-income households have historically increased spending by nearly 40% on goods and leisure following tax refund receipt.
• The stimulus arrives amidst slowing GDP growth, which was tracked at 2.4% for the fourth quarter of 2025.

While the $65 billion increase in tax refunds may provide a short-term boost to discretionary spending, BofA warns that the economy’s long-term health will rely on labor market stability.