Bank of America says Trump gives US economy a boost with $65 billion tax refund

According to Bank of America Global Research, tax refunds in 2026 are expected to be about $65 billion higher than in 2025 – an increase of 18% year over year. The bank estimates that total consumer stimulus from OBBBA will range from $135 billion to $140 billion. However, the structure of these tax breaks, especially changes in the maximum state and local tax deduction, suggests that middle- and upper-income households will reap the most benefits.

Amplitude “K”

Bank of America’s analysis highlights a continuing K-shaped dynamic in the post-2025 economy, as the financial wealth of the wealthy diverges sharply from that of lower-income Americans. In late 2025 and early 2026, spending by high-income households rose 2.4%, while low-income households saw growth of just 0.4%.

Middle- and high-income households should be the biggest beneficiaries of this policy, according to senior US economist Aditya Bhave, who predicted that K-shaped spending dynamics could become “more pronounced”. The economist’s note follows his findings earlier this week from… New York Federal Reserve This evidence of the K-shaped economy now extends back three years. “The consumer gap is about to deepen,” Bhave added.

While the bill includes deductions for tip and overtime income — which benefits service workers — it also raises the cap on the SALT (state and local tax) deduction, a policy that disproportionately favors those with higher incomes. The nonpartisan Tax Policy Center estimated that the largest monetary effects of the legislation would accrue to those with higher incomes.

Treasury and independent estimates Now the project The typical refund for 2026 could be about $300 to $1,000 higher than last year, with some estimates centered around $3,800 on average.

Wall Street versus Main Street

The distribution of this stimulus has major implications for how money circulates through the economy. Bank of America notes that high-income households are more likely to save than spend. So nearly half of this new stimulus may never reach the retail economy. Instead, unspent funds from wealthy recipients “are more likely to be used to buy stocks rather than pay down debt.”

This trend is already evident in consumer behaviour. Throughout 2025, affluent consumers continued to spend on services, while the broader consumer base became increasingly price conscious, prioritizing smaller-sized goods and cutting back on big-ticket purchases such as electronics and furniture.

A lifeline for low-income people

Despite the skew toward the wealthy, the OBBBA program provides a crucial lifeline to low-income families. Bank of America data indicates that for these households, tax refunds represent a much larger share of their average monthly spending than their wealthier peers, which means that a significant amount of support for the economy will come from this group.

“Even if the growth in refunds is fairly uniform…it could still boost low-income households’ spending — and take some pressure off ‘good’ discretionary spending budgets,” according to a separate analysis by the Bank of America Institute. Historically, low-income households use tax refunds to increase spending on goods, travel and entertainment by about 40% in the weeks following receipt.

Stimulus arrives at a critical moment. The institute said its 2025 fourth-quarter GDP tracking fell to 2.4%, and the economy had a “choppy” start through 2026. While the $65 billion increase in refunds will provide a temporary boost to discretionary spending between February and April, Bank of America warns that long-term economic momentum remains dependent on the labor market.

For this story, luck Journalists have used generative AI as a research tool. An editor verified the accuracy of the information before publication.