Big cash waves can move markets. In the United States, one of the biggest cash waves often comes from tax refunds. New tax changes for the 2025 tax year may lead to an unusually large refund season in spring 2026. This matters because refunds can affect how people spend and invest.
Several updates can increase refunds for many households. These include a higher standard deduction, a larger child tax credit, and bigger deductions for certain expenses. A deduction is an amount you can subtract from your income before taxes are calculated. When deductions go up, the tax bill can go down.
A key detail is how payroll taxes are collected during the year. Many workers have money taken out of each paycheck for taxes. This is called withholding. Withholding is meant to roughly match the final tax bill. If withholding stays too high after a law change, workers may overpay during the year. Then the government sends the extra back as a refund when people file taxes.
Refund timing matters. Most refunds for people who file online and use direct deposit often arrive within about three weeks after filing. That means the first wave may start in late January, with the largest wave often landing in February and March. If a large amount of money hits many bank accounts in a short window, markets can react quickly.
History shows that when households receive extra cash, some of it can flow into investments. This does not mean markets will rise for sure. But it explains why many investors watch cash events like refunds. Large, well-known companies often attract more attention because people recognize the names and find them easier to understand.
Risk still matters. Markets can move fast in both directions. A stop-loss is an order that sells an investment if it falls to a set price. It is one way some investors try to limit losses. Even with tools like that, there is no guaranteed outcome.
Felix Prehn and Goat Academy focus on helping people understand these big money flows in simple terms. The goal is to think clearly, manage risk, and avoid guessing.
To learn more about the educator behind these ideas and his mission, see Felix Prehn and Goat Academy’s background here: Felix Prehn Goat Academy