Many Americans can expect a windfall tax refund this year, in part due to tax cuts included in the bill that President Donald Trump signed on July 4.
It added several tax breaks for 2025, but the IRS did not change how much it was holding back from paychecks — meaning many workers overpaid and will get additional tax back (1).
The IRS will issue these refunds electronically. The agency’s taxpayer advocate says it will temporarily freeze tax refunds for those who don’t provide direct deposit information, all in an effort to “modernize” payments.
If you file your return without bank account information, the IRS will process it. However, if you are entitled to a refund, you won’t get it until you provide direct deposit information or request a paper check. If you do nothing, the agency will issue a check after six weeks (2).
Millions of Americans will still receive their tax refunds by check. Disproportionately, these people will be low-income, older, or lacking digital literacy skills or access to technology. Advocates are worried that those people need their returns the most — and are going to suffer because of the long delays.
The average refund in 2025 was $3,167, according to IRS data (3). However, various analysts estimate that amount will jump by $675 to $1,000 this year (4).
So the refunds will be more generous, but people may be waiting longer for them, particularly people who don’t have a bank account or access to traditional banking services.
Another issue is that 15 million Americans live in broadband deserts, where the internet is slow and digital banking may not be practical, according to a Pulse Points research paper (5).
For the 2025 tax filing season, the IRS issued 93.5 million tax refunds to individuals. Only 7% of those were issued by check. However, that still represents about 6.5 million refunds.
The IRS says paper checks are 16 times more likely to be lost, stolen or delayed than electronic payments, while electronic payments are also much faster — issued in less than three weeks versus six weeks or longer for refunds sent by mail (6).
This move toward electronic payments only is the right one in theory, writes Jennifer Tescher, founder and CEO of the consumer group Financial Health Network, in Payments Dive. “Checks are costly, inefficient and insecure,” she said (7).
She points to the fact that mail theft-related check fraud in the U.S. nearly doubled between 2021 and 2023 (8). And check-cashing stores, often located within payday lenders, charge fees of up to 12% — far more than banks.
However, Tescher adds, “Rolling out such a sweeping change with only six weeks’ notice risks leaving behind the very people who depend on those payments most” (7).
According to the most recent data from the Federal Deposit Insurance Corp. (FDIC), 5.6 million U.S. households are unbanked, which means no one in the household has a checking or savings account at a bank or credit union. The most common reasons they gave for this were not being able to afford minimum balance requirements and lacking trust in banks (9).
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If you file your return as soon as you can, and make sure the IRS has your banking information (double-check your account and bank routing numbers, which can be found on a check), your money should be direct-deposited within days.
In recent years, money management apps that aren’t associated with a traditional bank have become popular. However, there are some benefits to opening a traditional checking or savings account, like seamlessly receiving your tax refund, building credit (which isn’t always easy through an app), and accessing traditional loans.
If you’re struggling to meet minimum balance requirements (which, for traditional banks, can be $100 to $500), a simple online search will turn up free checking accounts that don’t charge fees and don’t require you to maintain a minimum balance (10).
If past financial mistakes are holding you back — say, you’ve bounced checks or haven’t paid overdraft fees — you may have a negative record with ChexSystems, a consumer reporting agency that tracks deposit and debit history. That record could prevent you from opening a new account for up to five years (11).
If that’s you, you might want to look into “second-chance” accounts, which some banks and credit unions offer to help you get back on track and rebuild your banking history (12).
And, if you do end up in a situation where your refund is frozen, there’s still time to fix it. You’ll get a CP53E notice from the IRS, which will ask you to add or update your direct deposit information to your online account with the IRS. You’ll typically have 30 days to respond. Hop to it, unless you want to wait weeks for your check (13).
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CNBC (1); IRS (2, 3, 6, 13); Morningstar (4); Pulse Points (5); Payments Dive (7); Internet Crime Complaint Center (8); FDIC (9); Bankrate (10); Chex Systems (11); CNBC (12)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
