K-shaped economy’s impact on 2026 tax refunds

The “K-shaped” economy in the U.S. is impacting tax refunds, with higher-income Americans benefiting more than lower-income households due to changes in the “big, beautiful bill” act. While average refunds are expected to rise by over $700 to about $3,800, the top 5% will see gains of $3,748, compared to just $18 for the lowest earners. The new law increases the SALT deduction cap but phases out benefits for those earning above $500,000. This disparity is likely to deepen the economic divide as lower-income consumers face affordability challenges amid inflation and a softening labor market.

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