Many Americans are set to receive larger tax refunds this year, largely due to the tax cuts included in the legislation signed by President Donald Trump on July 4.
While 2025 will see some additional tax breaks, the IRS hasn’t adjusted the amount that gets withheld from paychecks. As a result, many employees are overpaying their taxes and will be getting back more than expected.
The IRS issues refunds electronically, but its taxpayer advocacy group announced that it would temporarily halt refunds for individuals who haven’t provided direct deposit details in an effort to “modernize” payment methods.
If you submit your tax return without your banking information, it will still be processed. However, you won’t receive your refund until you give your direct deposit info or request a paper check. If you don’t take action, expect a check to arrive about six weeks later.
Millions might still get their tax refunds via check. This tends to affect low-income individuals, the elderly, or those without access to technology. Advocates are concerned that these are precisely the people who need their refunds the most and will face delays.
The IRS reports that the average refund in 2025 was $3,167. Many analysts predict that this year’s average could increase by about $675 to $1,000.
So yes, while refunds are looking to be more generous, those lacking bank accounts or access to standard banking services may experience longer wait times.
Another point to consider is a study from Pulse Point, highlighting that around 15 million Americans live in “broadband deserts,” where internet connectivity is slow and digital banking options might not be viable.
During the 2025 tax season, the IRS distributed approximately 93.5 million tax refunds, with only 7% going out as checks. Yet, this still amounts to around 6.5 million checks issued.
The IRS mentions that paper checks are 16 times likelier to be lost, stolen, or delayed compared to electronic payments, which usually are processed within three weeks as opposed to more than six weeks for checks.
Jennifer Tescher, founder and CEO of the Financial Health Network, expressed in Payments Dive that while the shift to electronic payments makes sense theoretically, checks are expensive, inefficient, and prone to fraud.
She also pointed out that fraud related to check theft has almost doubled from 2021 to 2023. Plus, check cashing services usually charge fees that can reach up to 12%, which is significantly higher than those at banks.
However, she cautioned that implementing such major changes with little notice can leave vulnerable populations behind.
Recent data from the Federal Deposit Insurance Corporation revealed that 5.6 million U.S. households lack any bank accounts. Individuals often cite inability to meet minimum balance requirements and distrust of banks as reasons for this.
If you file your return promptly and ensure the IRS has your banking information right (a good double-check of your account and routing numbers is wise), you could see your money deposited within days.
Money management apps not affiliated with traditional banks have gained traction lately, but having a standard checking or savings account still offers significant benefits. These include easy receipt of taxes, opportunities to build credit, and access to traditional loans.
If maintaining a minimum balance with traditional banks (which can range from $100 to $500) is a concern, looking for free checking accounts with no fees online could be a helpful option.
If you’ve had previous issues like bounced checks or unpaid overdraft fees, this could affect your standing with ChexSystems, complicating your ability to open new accounts.
If this is your situation, consider looking into “second chance” accounts available at some banks and credit unions, which aim to help rehabilitate your banking history.
If your refund is on hold, don’t worry too much. You can still address it. You will receive a CP53E notice from the IRS asking you to add or update your direct deposit details on the IRS online platform. Typically, this process takes around 30 days to resolve. If waiting for your check is not appealing, it may be worthwhile to take action now.
