Several states have issued warnings to taxpayers about potential delays in receiving tax refunds this year, as state agencies scramble to implement adjustments associated with new federal tax laws.
The new tax provisions, which were enacted under legislation signed by President Donald Trump, introduce various tax breaks that are set to take effect in 2025. These changes include deductions for tips, overtime wages, auto loan interest, and increased deductions for certain seniors. Each state now faces the critical decision of whether to adopt these federal changes, modify them, or omit them altogether.
Among the states alerting residents to possible delays are:
Idaho: State officials have indicated that tax refunds may be postponed by up to six weeks due to budget cuts that resulted in fewer temporary workers available during tax season. The Idaho Division of Financial Management cautioned that overall processing times could extend between 12 to 24 weeks. Compounding the issue, Idaho did not finalize its legislation to align its tax code with federal changes until February 11, after the IRS tax season had already started, which left over 158,000 residents having filed returns prior to the updates. Jeff McCray, chairman of the Idaho Tax Commission, noted that normally it takes around nine months to complete needed changes to forms and systems.
New York: Some taxpayers in New York have reported delays stemming from a problem with Intuit TurboTax software, which caused issues in filing and slowed down refunds. The company has stated that the problem would be rectified by February 4.
Oregon: The Oregon Department of Revenue has announced that processing for paper tax returns will not commence until the end of the month, resulting in the first refunds possibly being issued by early April. Officials stated that delays were caused partly by receiving certain forms and information from the IRS later than anticipated, which hindered their ability to update systems promptly.
South Carolina: In South Carolina, officials have warned that processing times may also lag since the state is choosing not to conform to the new federal tax laws. Taxpayers will need to amend their state filings to add back income that may have been deducted federally, including tips and overtime pay. Failure to adjust may result in the need for amended returns, further delaying refunds.
Washington, D.C.: Tax filings in the District of Columbia are also facing disruptions due to a legal conflict regarding the application of new federal tax rules. Congress intervened during the tax season to override the district’s previous decision not to adopt the new federal law, a measure that Trump signed into effect in February. Consequently, both electronic and paper versions of the 2025 district income tax forms are delayed.
Beyond state-specific issues, the IRS notes that even under normal processing conditions, various factors may delay refunds. These include errors or incomplete information on returns, complications from identity theft or fraud protections, and necessary corrections for credits such as the child tax credit. Refunds related to claims for the earned income tax credit or the additional child tax credit may also experience delays.
Taxpayers looking to track their refunds can utilize the “Where’s My Refund?” tool available on IRS.gov, and should wait appropriate time spans based on their filing method before checking status.
As we approach the tax filing deadline, it is essential for taxpayers across various states to remain informed about these potential delays and ensure that their filings are accurate to expedite the process.