The situation: Low-income Americans are feeling squeezed by high prices, declining pay, and public assistance that doesn’t go far enough.

• Shrinking paychecks: 25% of Dollar General shoppers say their income fell in the past year, and nearly 60% have cut back on essentials, the retailer reported on its June earnings call.
• Eating out less: Inflation and economic anxiety are causing low-income consumers to think twice before pulling into a McDonald’s drive-thru—a broader industry trend as US QSR traffic among this group sank by nearly double-digit percentages YoY, McDonald’s CEO Chris Kempczinski said on the company’s Q1 call.
• Stretched SNAP dollars: 86% of Supplemental Nutrition Assistance Program (SNAP) recipients run out of benefits before month-end, per Numerator.

What’s next: While Congress is fast-tracking a sweeping bill that encompasses much of President Donald Trump’s legislative agenda, it is unlikely to help these households. The final package is expected to include several key components, including:

• Extend the 2017 tax cuts. While Republicans are positioning this move as a broad-based tax relief package, the benefits will largely flow to the wealthiest Americans and could leave low- and moderate-income households worse off. Households in the top 0.1%—those earning more than $4.3 million—would see an average boost of $389,000 in after-tax income in 2026, according to an analysis from the Wharton School of Business. By contrast, households earning $17,000 to $51,000 would lose an average of $705 in after-tax income starting in 2026. Those making less than $17,000 annually would see their after-tax income drop by $1,035 as early as next year.
• Cap SNAP growth. The Senate version of the bill would limit future expansion and shift more administrative costs to states, forcing officials to trim benefits or raid already-tight budgets. Those moves are likely to further strain recipients, 68% of whom say SNAP only “somewhat” or “barely” meets their nutritional needs, up five points since 2022, per Numerator.
• Cut Medicaid. Deep funding reductions and tighter eligibility rules could leave 10.6 million people without coverage, the Center on Budget and Policy Priorities warns.

Bottom line: Declining after-tax income and tariff-driven inflation mean relief for low-income Americans is unlikely anytime soon. Their budgets will tighten, shrinking grocery baskets and curbing discretionary spending.

While Walmart, Dollar General, and other value retailers are currently propped up by higher-income shoppers, that cushion could quickly disappear if those customers expect tax-cut windfalls and return to old spending habits.