The "K-shaped" economy will affect your 2026 tax refund. Here's how.

The "K-shaped" economy is hitting U.S. consumers in unexpected ways, including their tax refunds.  Edited by Alain Sherter In:

The "K-shaped" economy is hitting U.S. consumers in unexpected ways, including their tax refunds. 

Higher-income Americans are set to reap bigger benefits in their tax refunds than other households, thanks to changes in the "big, beautiful bill" act," according to a recent analysis from investment firm Principal Asset Management. The Republican-backed measure, signed into law by President Trump in July of 2025, extended 2017 tax cuts and introduced a host of new tax breaks. 

Experts have taken to describe the U.S. economy as K-shaped to reflect the trend in which wealthier Americans have pulled further ahead of lower-income workers amid a surging stock market and rising home prices. 

That pattern is also likely to be visible in this year's tax refunds, which are expected to rise overall while delivering the biggest gains to upper-middle-income households, Principal Asset Management found.

"The average taxpayer's cash refund should see a boost of over $700 this year, lifting the typical refund to around $3,800, fueled by retroactive provisions included in the One Big Beautiful Bill Act," Principal Asset Management market strategist Christian Floro said in a recent report, noting that "these benefits are skewed toward higher-income households."