Tax season has begun, but for many individuals in certain states and the District of Columbia, the much-anticipated tax refunds may be delayed this year. The disruptions stem from complications related to the implementation of President Donald Trump’s tax and spending bill, which introduced new tax breaks meant to benefit middle-class Americans starting in 2025. However, discrepancies in how state tax systems adapt to these changes are creating significant hurdles.
According to Richard Pon, a certified public accountant in San Francisco, some states are conforming fully, others only partially, and some are choosing not to conform to the new federal tax laws at all. This variation has raised concerns that tax refund delays may be more widespread than usual.
Idaho is one notable state that has publicly advised taxpayers about potential delays. Lori Wolff from the state’s Division of Financial Management indicated that budget cuts have resulted in a reduced workforce during the tax season, which could extend processing times by 12 to 24 weeks. Early estimates suggest that the delays may cost Idaho taxpayers as much as $7 million in additional interest payments on their refunds. Further complicating matters, Governor Brad Little delayed signing the conformity bill until February 11, after tax season had already begun, leading to over 158,000 early filers facing potential confusion.
New York has experienced its own setbacks. Issues related to Intuit TurboTax software have left some individuals unable to file on time, postponing their expected refunds. Complaints have surfaced on multiple platforms, highlighting frustrations among taxpayers unable to meet the filing deadlines.
Oregon taxpayers filing paper returns won’t see their applications processed until at least the end of March, with refunds not likely to be issued until early April. This delay stems from the IRS being slow to provide necessary tax forms, which in turn affects Oregon’s ability to update its tax processing systems. Additionally, a form error concerning the Oregon Kids Credit has raised concerns about further adjustments needed for some taxpayers, although officials have stated that they are monitoring the situation closely.
In South Carolina, the Department of Revenue has warned that tax processing will take longer than normal due to the state’s decision not to conform to the new federal tax laws. Taxpayers are urged to exercise caution in adjusting their filings to account for income previously deducted at the federal level, such as tips and overtime wages. Failure to do so may necessitate amended returns, leading to additional delays.
Washington, D.C., remains embroiled in a contentious battle over its tax conformity. The district’s decision late last year not to align with the federal changes was overturned by Congress in the midst of tax season, creating chaos in filing procedures. The Office of Tax and Revenue reports that both electronic and paper tax forms will be delayed due to this ongoing conflict. The D.C. Attorney General argues Congress’s intervention was invalid, as the window for such a reversal had already closed. If the dispute drags on, tax filing deadlines might be pushed to September, risking a disruption of up to $400 million in cash flow for the D.C. government. About 60,000 individuals who have already filed their taxes may need to refile, according to the National Taxpayers Union Foundation.
The situation highlights a broader trend of uncertainty in the tax landscape as many taxpayers now face the possibility of delayed refunds amidst ongoing legislative battles and tax conformity challenges. As these states and territories navigate the complexities of the new federal tax laws, taxpayers are advised to remain vigilant and informed about their rights and the potential impacts on their refunds.
