The Internal Revenue Service (IRS) issued a record $296 billion in tax refunds during the 2026 filing season, representing a 17% increase from the previous year, even as staffing shortages and technology problems caused significant delays for some taxpayers.

According to a new Government Accountability Office report, the IRS issued about $43 billion more in refunds than it did during the 2025 filing season. The average refund also rose by $333, or 11%, with millions of taxpayers benefiting from new deductions introduced under President Donald Trump’s One Big Beautiful Bill Act.

The law introduced tax deductions for qualified tips and overtime, among other changes, helping increase the size of refunds for eligible taxpayers.

However, the larger refunds came alongside growing concerns over how quickly taxpayers could receive their money, particularly those relying on paper checks.

The IRS has increasingly shifted toward direct deposits, sending about 4.2 million notices to taxpayers by early May asking them to provide bank account information for electronic refund payments.

The change dramatically reduced the number of paper-check refunds. By early April, the IRS had issued roughly 493,000 paper-check refunds, down more than 80% from about 2.8 million during the same period in 2025.

For those who still received paper checks, the wait was considerably longer. Taxpayers waited an average of 36 days for their refunds, compared with 13 days the previous year.

By contrast, taxpayers receiving refunds through direct deposit generally experienced much shorter waits, with nine out of 10 direct-deposit refunds arriving within 21 days.

The GAO also highlighted the impact of staff reductions inside the IRS. The agency’s Submission Processing unit ended the filing season with 8,111 employees, down 18% from the 9,850 employees it had the previous year.

IRS officials acknowledged that the reduced workforce was insufficient to process some returns on time.

Business taxpayers were particularly affected. The average processing time for business Form 941 returns increased to 72 days in 2026, compared with 45 days in 2025 and 25 days in 2024.

Technology failures further complicated the filing season. The IRS’s system for processing individual paper returns was reportedly unable to process tax year 2025 returns during the first six weeks of the 2026 filing season, while its scanning system for business paper returns was unavailable throughout the filing season.

The agency attempted to address the problem by relying more heavily on outside vendors, sending approximately 3.7 million business paper returns to vendors for scanning—a 725% increase from the previous year.

Despite the challenges, the IRS processed about 98% of the 177 million individual and business returns it received during the filing season.

With access to live assistance declining, taxpayers also turned increasingly to the agency’s digital services. Individual online accounts recorded approximately 155 million successful logins through April, while the “Where’s My Refund?” tool received about 346 million visits, a 9% increase from 2025.

The figures highlight a mixed 2026 tax season: Americans received significantly more money in refunds, but taxpayers depending on paper-based systems faced substantially longer waits.:::