A current Wall Street Journal Poll looking at the state of our economy and whether or not you’re happy or sad about it seems to have everything to do with your individual socio-economic status. It turns out that there were extreme winners and losers from the OBBBA.
There are roughly $125B in tax cuts effective for 2025 that should land in consumers’ wallets during the spring tax-return season, plus another $80B worth of 2026 tax cuts that should flow through to households throughout the year from changes in paycheck withholding, according to estimates from Evercore. But many Americans won’t reap any of those rewards because the bottom 30% of American households don’t pay income taxes.
As such, if you’re in that lower economic ranking, you’re probably not too happy. The reasons for this, given the changes in OBBBA, include.
1 – Reductions in Medicaid
2 – Reductions to the Food Stamp Program
3 – Changes to the eligibility and repayment of Student Loans
4 – And expiration of the Enhanced Premium Tax Credits under the Affordable Care Act
When you add in the additional expenses lower income households now have as a result of the increased costs from the new system of tariffs, you have some very unhappy workers. But if you look at the top 30% of American Households, the message is completely different.
The changes in these economic brackets are generally about the difference between their tax savings under OBBBA and the increase in expenses they’re seeing as a result of tariffs. The top 10% of earners will see tax savings of $13,620 in 2025 while their increases in expenses due to tariffs only amount to an additional $3,950.
Those households should see a net benefit of $9,670 in 2025 while the bottom 10% of household will see a loss of -$2,150.
Let me leave you with this…
When you look at it from that standpoint, the difference in the numbers from the University of Michigan Consumer Sentiment Index over last year are easy to understand. The index began 2025 at 71.7% and ended at 52.9%.
Please remember that there’s a lot more people in the lower 30% than are in the upper numbers. And when you add in the devaluation of the dollar, the epiphany escalates exponentially.
The Wall Street Dollar Index, which is a broad measure of how our dollar measures against other major foreign currencies, began 2025 at 102.99. This morning it was trading at 96.37.
Over twelve short months, every dollar sitting in your bank account has lost 7% of its purchasing power.
I’m writing this so that entrepreneurs can get a handle on their budgeting process for 2026. We’ve had an amazing number of changes in a very short amount of time to comprehend.
Please look at this from the standpoint of your individual employees. If they’re going to be happy and continue working at your companies, it will be because they aren’t having problems paying their rent or buying groceries for their families.
When they do start having these problems, you’re going to have problems. Workers, just like voters, make decisions with their feet.
If they can’t pay their bills, they’re going to go work somewhere else.
A good entrepreneur never thinks about themselves first. They think like the people around them first.
Please remember that no one makes money working for themselves. We only make money when other people work for us.
If you’re having difficulties with your accounting and tax work, we’d love to talk to you.
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
888-310-0300
www.AccountingSolutionsLtd.com
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