Recent modifications in the tax law under the 2025 One Big Beautiful Bill could lead to many Americans seeing tax refunds this year, particularly due to new deductions related to tips and overtime.
“This bill was passed in July,” Treasury Secretary Scott Bessent noted. “Working Americans can expect large refunds in the first quarter since their withholdings remain unchanged.” He mentioned that around $150 billion in refunds could mean households might receive between $1,000 and $2,000.
While that sounds fantastic, it’s important to tread carefully. If you’re anticipating a tax refund, be ready to provide your bank account details to the IRS. Not doing so could result in significant delays.
Under new IRS regulations tied to 2025 tax returns, taxpayers must supply their bank account and routing numbers to ensure prompt refunds via direct deposit. While the IRS will still process returns without this information, refunds will be put on hold until the necessary details are submitted or a paper check is requested. If the bank details provided are incorrect, direct deposits will be delayed until the matter is sorted out.
“Many taxpayers might not fully grasp these updates,” observed senior tax advisor Mitchell Gerstein. He emphasized that if individuals are uneasy about sharing their banking info with the IRS, they should be aware that electronic payments are the standard procedure.
For those reluctant to divulge such information, it’s important to note that delays are likely—possibly weeks or more—as the IRS seeks their banking details before issuing a refund check.
Interestingly, some groups, including international taxpayers, minors, prisoners, those with religious objections, and deceased individuals, will still receive paper check refunds.
At this stage, the IRS will continue issuing checks, but plans are in motion to phase this option out over the coming years.
For anyone without a bank account, it’s advisable to set up a basic, no-fee checking account at a trusted bank, either in person or online. There are options available through institutions like Ally Bank or Discover Bank. “The IRS also allows splitting refunds into up to three accounts for different purposes,” Gerstein added.
What if I don’t have a bank account and don’t want to open one?
For those lacking a bank account, alternatives are available.
The Treasury Department offers different routes such as prepaid debit or credit cards, as well as approved digital wallets like PayPal. Some prepaid cards, such as NetSpend and Bluebird, can provide routing and account numbers suitable for direct deposit.
It’s wise to check with your financial institution to determine which numbers to use.
The IRS also encourages visiting the FDIC website or the National Credit Union Administration to learn about opening a bank account, which can be helpful for veterans through programs like the Veterans Benefit Bank Program (VBBP).
If opting for a completely digital route, accounting expert David Lopez suggests creating an online account via the IRS website or through ID.me, a platform used by various agencies to track tax refund status.
“With ID.me, users can also review their tax documents from the past seven years, obtain income reports, and see if they have debts,” he explained. Payment options, including installments, may be available if needed.
Typically, if filed electronically, refunds are processed within 21 days; if mailed, it could take over six weeks. Complications such as missing banking details can lead to further delays. Check the IRS site for the latest updates on your refund status.
Why is the IRS promoting electronic payments so strongly?
Gerstein highlights that the main advantage of electronic payments for both individuals and businesses is instant confirmation, which enhances speed and security in refunds, minimizing the chances of lost checks. Most experts agree that direct deposits are processed faster than checks, making it the most efficient way to interact with the IRS.
“Our message is straightforward,” he concluded. “Create your IRS online account, verify your banking details, and pay attention to any correspondence from the IRS.”
