Many Americans are expected to receive windfall tax refunds this year, in part because of tax cuts included in the bill signed by President Donald Trump on July 4.
It increases several tax deductions through 2025, but the IRS does not change the amount it garnishes from wages, meaning many workers who were overpaid will receive additional tax refunds(1).
The IRS will issue these refunds electronically. Taxpayer advocates at the agency said it will temporarily freeze refunds for those who don’t provide direct deposit information, all in an effort to “modernize” payments.
If you don’t provide your bank account information when you file your tax return, it will be processed by the IRS. However, if you are entitled to a refund, you will not be able to get it until you provide your direct deposit information or request a paper check. If you do nothing, the agency will issue the 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 lack digital literacy skills or access to technology. Supporters worry these are the people who need the rewards most and will suffer from long delays.
According to IRS data(3), the average refund amount in 2025 will be $3,167. However, multiple analysts estimate this amount will increase by $675 to $1,000 this year(4).
As a result, refunds will be more generous, but people may have to wait longer for their refunds, especially those who are unbanked or don’t have access to traditional banking services.
Another problem is that 15 million Americans live in broadband deserts, where internet speeds are slow and digital banking may not be practical, according to a Pulse Points research paper(5).
During the 2025 tax filing season, the IRS issued $93.5 million in tax refunds to individuals. Only 7% of these were issued by check. However, this still represents a refund of approximately $6.5 million.
The IRS says paper checks are 16 times more likely to be lost, stolen, or delayed than electronic payments, which are also much faster—issued in less than three weeks, compared to six weeks or more for refunds sent by mail(6).
Jennifer Tescher, founder and CEO of consumer group Financial Health Network, wrote in Payments Dive that this shift to electronic payments is correct in theory. “Checks are costly, inefficient and unsafe,” she said (7).
She noted that check fraud related to mail theft will nearly double in the United States between 2021 and 2023(8). Check cashing stores, often located within payday lenders, charge fees of up to 12%, much higher than banks.
However, Tescher adds, “Introducing such sweeping changes with only six weeks’ notice could result in those who most rely on these payments being left behind” (7).
According to the latest data from the Federal Deposit Insurance Corporation (FDIC), 5.6 million U.S. households are unbanked, meaning no one in the household has a checking or savings account at a bank or credit union. The most common reasons they gave were an inability to meet minimum balance requirements and a lack of trust in the bank (9).
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If you file your tax return as soon as possible and make sure the IRS has your banking information (double check your account and bank routing numbers, which can be found on your checks), your money should be directly deposited within a few days.
In recent years, money management apps that have nothing to do with traditional banks have become popular. However, there are some benefits to opening a traditional checking or savings account, such as seamlessly receiving your tax refund, building credit (which isn’t always easy with an app), and getting a traditional loan.
If you’re having trouble meeting the minimum balance requirement (which can be anywhere from $100 to $500 for a traditional bank), a simple online search can lead to no-fee checking accounts that charge no fees and don’t require you to maintain a minimum balance(10).
If past financial mistakes have held you back — for example, you bounced a check or failed to pay an overdraft fee — you may have a negative record with ChexSystems, a consumer reporting agency that tracks deposit and debit history. This record may prevent you from opening new accounts for up to five years(11).
If this is you, you may 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 end up with a refund freeze, there’s still time to resolve it. You will receive 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 usually have 30 days to respond. Jump ahead, unless you want to wait weeks for your check (13).
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CNBC (1); IRS (2, 3, 6, 13); Morningstar (4); Pulse Point (5); Payment Dive (7); Internet Crime Complaint Center (8); FDIC (9); Bank Rates (10); Chex Systems (11); CNBC (12)
This article provides information only and should not be considered advice. It is provided without any warranty of any kind.
