New Federal Reserve data and a flurry of state-level tax proposals are underscoring how sharply the US economy is splitting between households that are compounding wealth and those struggling to keep up.

For financial advisors, the combination of a “K-shaped” recovery, more aggressive blue-state tax regimes, and rising political scrutiny of high-net-worth clients is creating a more complex planning environment.

Record share of wealth amassing at the top

The Fed reports that the net worth of the top 1% of Americans climbed to nearly 32% of total household wealth in the third quarter of 2025, while the bottom half of households collectively held just 2.5%. At the same time, a key measure of wealth concentration, the Gini coefficient, is at a 60-year high, reversing the brief, stimulus-fueled narrowing seen early in the pandemic.

Labor’s slice of the pie has also shrunk. The share of US gross domestic product going to workers as compensation has fallen to its lowest level in more than 75 years, meaning the average nonfarm worker is capturing a declining piece of an economy that has expanded over the past decade and a half.

Mark Zandi, chief economist at Moody’s Analytics, said the divergence is now baked into the system rather than a temporary side effect of Covid-era policy. “This is not a cyclical or temporary phenomena,” he said in an interview with CNBC. “This is a structural, fundamental issue.”

For advisors, that structural split is showing up in client behavior. Higher-earning households, buoyed by rising equity markets, elevated home values and strong job prospects in sectors like technology and health care, continue to spend heavily on travel and premium goods. Bank of America data show households earning more than $150,000 are spending more on discretionary categories than they did in 2019, while those under $75,000 are spending less.

Moody’s analysis finds that total “outlays” – a broad measure of spending and nonmortgage payments – for the top 20% of consumers hit multidecade highs last year, while outlays for the remaining 80% fell to new lows. Zandi said that for that 80%, overall spending has failed to outpace inflation over the past six years, leaving living standards flat.

“Their standard of living has not budged since the pandemic hit,” he said. “It’s just disconcerting.”

Blue states push for higher taxes on the wealthy

That “winner-take-all economy” narrative is feeding political momentum behind higher taxes on top earners and billionaires, particularly in Democratic-led states. Lawmakers in Virginia, Washington state, Rhode Island, and Michigan are advancing proposals that would either add new millionaire brackets, surtaxes or higher top rates, while New York City’s mayor is pressing for an added 2% income tax on millionaire residents.

California is arguably the most high-profile test case at the momeny. Its proposed Billionaire Tax Act – featuring a one-time 5% levy on residents with a net worth of at least $1 billion, retroactive to Jan. 1 – would tax wealth rather than income and has already prompted some high-profile departures. Google co-founder Larry Page has reportedly moved to Florida, and tech investor David Sacks relocated to Texas, while critics describe the measure as an “asset seizure.”

Read more: RIAs weigh exits amid California billionaire tax proposal

The push is widening the divide between blue and red states. As Virginia considers a 10% bracket on income over $1 million and a state-level net investment income tax, neighboring West Virginia and North Carolina are cutting income taxes or moving toward lower flat rates. Elsewhere on the East Coast, New York City Mayor Zohran Mamdani has floated taxes on affluent households and corporations as a way to plug a looming $12 billion budget shortfall.

“Now it’s a starker divide,” Jared Walczak, senior fellow at the Tax Foundation, told CNBC. “It’s not just that as incomes rise people should pay progressively more. It’s an effort to only have taxes on a specific subset of the population.”

California’s billionaire tax draws compromise talk

In California, Representative Ro Khanna is trying to broker a middle path between the health care workers union backing the billionaire tax and the tech leaders funding campaigns against it. Tech industry and labor figures are expected to meet at Stanford University in March in search of tax structures that could win support from Silicon Valley while still replacing billions in expected federal health-care cuts.

Khanna has floated alternatives that tie taxation more closely to realizable cash flows rather than paper gains on illiquid stock. In a conciliatory statement, the Democrat congressman potentially making a run for the Oval Office in 2028 said taxing Silicon Valley wealth requires “creative proposals like taxing loans on assets, so there is an actual transaction tied to taxation.”

He also warned against measures that would treat illiquid stock and voting shares as taxable in ways that could constrain start-ups and founder control, even as he continues to argue for higher contributions from billionaires to address “waste, fraud, and abuse” and budget pressures.

“​​I’ve listened closely to concerns on both sides and have been at the negotiating table, focused on bringing tech entrepreneurs into dialogue with the ballot proponents to work through questions of both innovation and inequality constructively,” Khanna said.