In a significant shift for the upcoming tax season, the Internal Revenue Service (IRS) announced that starting in 2026, it will no longer issue paper checks for tax refunds to the majority of individual taxpayers filing 2025 tax returns. This change is set against a backdrop of recent comprehensive alterations in tax legislation, which could lead to larger refunds for many filers.
The IRS initiated the 2025 tax season on January 27, and while the official start date for the 2026 filing season has not been confirmed, speculation suggests it could commence in early February. Tax experts have indicated the possibility of slight delays in processing, particularly affecting early filers eager for refunds.
For the previous tax year, 2025, IRS data revealed that the average federal income tax refund stood at $3,052, with expectations of potentially higher amounts in 2026 due to new deductions introduced in recent legislation. Noteworthy among these changes is the “One Big Beautiful Bill Act,” enacted on July 4, which introduced various tax breaks, including deductions for overtime pay, tip income, car loan interest, and specific benefits for taxpayers aged 65 and older.
However, navigating these new tax rules may prove challenging for many households. Taxpayers will need to be attentive to the details of these changes as the new deductions come with specific eligibility criteria. Importantly, to claim these benefits, taxpayers will need to complete a new Schedule 1-A form, which was still in draft form as of late December 2025. The IRS clarified that completing and submitting draft forms will not be permissible.
Moreover, the IRS emphasized the necessity of opting for direct deposit to receive refunds, as the shift away from paper checks affects nearly all individual taxpayers. While a limited number of exceptions may apply, taxpayers who traditionally received checks must now establish direct deposit accounts or consider alternatives like prepaid debit cards or digital wallets.
With the upcoming tax regulations, experts anticipate fluctuations in refund amounts based on individual circumstances. For example, expected changes could provide a new $6,000 additional deduction for taxpayers aged 65 and older, a deduction of up to $10,000 for auto loan interest, and a $25,000 deduction for qualifying tip income. The impact of these changes varies widely based on income levels, with some taxpayers potentially seeing increased refunds ranging from $300 to $1,000, while others may not experience significant changes.
In the wake of significant IRS staffing changes, including leadership shifts with the appointment of Frank Bisignano as the newly established CEO, the agency faces challenges in managing what is projected to be a busy and complex tax season. Despite the potential for larger refunds due to tax breaks, the administrative changes and new filing requirements could lead to delays and complexities for many taxpayers.
As preparation begins for the 2026 tax season, it’s crucial for individuals to familiarize themselves with the new rules and prepare necessary documentation early. Taxpayers are encouraged to gather their financial records and consider setting up direct deposit to ensure efficient processing of their refunds. As always, patience will be key as taxpayers navigate this evolving tax landscape.
