LARGER TAX REFUNDS TO BENEFIT ONE COMPANY MOST: JP MORGAN
The larger refunds in this year’s tax season will benefit Costco more than other companies, according to a new JP Morgan analysis, citing the retailer’s tax windfalls due to its geographic footprint and customer demographics.
Why It Matters
Across the board, tax refunds are set to increase an average of $1,000 per household due to President Donald Trump’s Working Families Tax Cuts, the Treasury Department said this week.
However, corporations and businesses are set to benefit from the changes as well.
What To Know
Analysts wrote that Costco will benefit from this year’s tax stimulus because it has more “mid to high-end exposure,” compared to BJ’s and Sam’s Club, which have a “more low-end exposure.”
Across the board, core retail sales are anticipated to rise more than 1 percent as a result of the tax changes, JPMorgan estimated.
“A lot of the tax cuts are in the forms of deductions, which benefit those taxpayers at a higher marginal bracket than those at a lower marginal bracket,” Drew Powers, the founder of Illinois-based Powers Financial Group, told Newsweek. “The demographics of Costco shoppers tends to skew to moderate- to higher-income earners, as opposed to a lower-income demographic at other large chains. The assumption here is that Costco shoppers are better positioned to spend more, especially on higher-priced items.”
In 2026, tax refunds will be around $65 billion higher than last year, according to Bank of America Global Research. The bank also predicts that the total consumer stimulus from The One Big Beautiful Bill Act (OBBBA), which was signed into law by President Donald Trump last year, will be between $135 billion and $140 billion.
More than 100 million households are set to receive a refund. For American families with two children, the average tax cut will be $1,700 because of the enhanced child tax credit.
The child tax credit for tax year 2025 increased to $2,200 and was adjusted for inflation, and the standard deduction doubled, impacting roughly 90 percent of American taxpayers, the Treasury said.
The no tax on tips and overtime rules that are going into effect will also boost refunds for many, leading to higher purchasing power at retailers like Costco.
What People Are Saying
Drew Powers, the founder of Illinois-based Powers Financial Group, told Newsweek: “What can get lost in this discussion is that inflation has risen nearly 30% since 2019, and credit card balances are back to the record high levels after a small decrease during the pandemic. Even moderate-income earners are struggling to make ends meet. I hope tax refunds will go to pay down credit card balances and help balance household budgets. If there is a spending bump, it is not necessarily a good thing as it may just be consumers kicking the proverbial debt can down the road.”
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: “Inflationary pressures have taken their toll on Americans and their buying power over the last two years, with many retailers feeling the effects through declining demand for certain times. Costco has been able to weather the storm more effectively than most by finding ways of keeping their products more affordable.”
What Happens Next
Due to the increased buying power of higher income Americans, Costco could reap the benefits in the year ahead.
“If tax refunds for Americans are bigger this year, Costco stands to be one of the retailers to gain the most from that added buying power,” Beene said. “Their mixture of everyday items and strong, customer-friendly pricing are the logical choice for many who are wanting to get the most bang for their buck for their refunds.”
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2026-02-06T20:58:47Z
