For millions of Americans, atax refundis not a bonus. It is survival money. It clears credit card debt, pays rent, and restores savings after a long year. In 2026, however, thousands of taxpayers may have to wait longer than expected.
Four states, Idaho, New York, Oregon and South Carolina, along with Washington, DC, are warning residents that refunds could be delayed. The slowdown stems from budget cuts, software problems and disputes over whether to adopt new federal tax changes signed by President Donald Trump in 2025.
The federal tax overhaul introduced several new breaks, including an additional senior deduction, exemptions on tips and overtime pay, and a new deduction for auto loan interest. States must decide whether to conform to those federal changes.
Some states fully adopt federal law. Others reject it. Some conform partially. That patchwork has created confusion for tax agencies and software providers.
'State tax conformity will be the biggest hurdle,' said Richard Pon, a certified public accountant in San Francisco. When states move in different directions, forms and computer systems must be rebuilt quickly, often in the middle of filing season.
Idaho is confronting both budget and timing pressures. Lori Wolff, administrator of the state's Division of Financial Management, warned that reductions in temporary tax-season staff could slow processing by 12 to 24 weeks. Refunds themselves could be delayed by up to six weeks. The state estimates the slowdown could cost as much as 7 million dollars in additional refund interest payments.
Governor Brad Little signed Idaho's conformity bill on February 11, weeks after theIRS opened filing seasonon 26 January. By that time, more than 158,000 Idaho residents had already submitted returns.
Updating tax forms and computer systems typically takes nine months, according to Tax Commission Chairman Jeff McCray. State officials say they are accelerating the process, but delays remain likely.
In New York, frustration has centred on reports involving Intuit TurboTax. Some users complained that asoftware issue, which was expected to be resolved in early February, disrupted filings and slowed refunds.
State officials have not declared a systemic delay. However, widespread reliance on digital filing means even isolated software errors can affect thousands of individual taxpayers. For filers who depend on quick electronic processing, technical glitches can translate into weeks of uncertainty.
Source: International Business Times UK
