Tax Refund Surge Could Lift Payment Volumes, Spotlight American Express Company

Tax Refund Surge Fuels Payment Network Flows

A larger-than-usual tax refund season is bolstering consumer liquidity and is likely to lift card transaction volumes for payment networks and issuers such as American Express Company. The IRS reports the average refund is $2,476 through Feb. 13, up 14.2% year-on-year. Bank of America analysts say provisions in the One Big Beautiful Bill Act — notably a higher cap on the state and local tax deduction and a new overtime pay deduction — are collectively providing roughly $1,000 of stimulus per household on average, which they estimate is underpinning the bigger refunds.

How consumers deploy those refunds will shape who benefits most. Bank of America surveys find more than a third of respondents plan to use refunds to pay down debt and another 13% say they will save them, while past patterns show low- and middle-income households disproportionately channel refunds into clothing and discount retail spending. For American Express, which depends on both cardholder spending and merchant acceptance, increased disposable income among broad consumer cohorts can translate into higher transaction volumes, lower delinquency pressure and improved fee revenue, even if spending patterns skew toward value retailers.

Analysts caution the impact is conditional on behavior and merchant mix. If refunds primarily shrink household debt, the short-term lift to discretionary spending is muted; if they flow into retail purchases, categories from apparel to travel see a more immediate boost in charge volumes. For AmEx, the effect is twofold: a possible uptick in purchase volumes from cardmembers and a pickup in acceptance and cross‑category merchant activity that supports network economics, but the magnitude depends on whether spending favors premium services or value-oriented retail.

Berkshire Reallocation Heightens AmEx Visibility

Separately, portfolio moves by large institutions are raising AmEx’s profile. Berkshire Hathaway’s continued trimming of some large tech holdings reduces the gap between Apple and American Express in its equity mix, drawing renewed attention to American Express as a sizable holding among major investors.

Retail and Credit Signals to Watch

Retailers such as Ross Stores and Burlington are singled out by analysts as likely beneficiaries if refunds flow into apparel, while credit-focused firms like Synchrony Financial stand to gain if consumers use refunds to manage balances and then maintain card activity. Industry watchers say the balance between debt repayment and discretionary spending will determine whether payments networks or financial lenders capture the bulk of the seasonal lift.