IRS push away from paper checks raises refund concerns. Tax Notes reports (paywall) that the IRS is holding some refunds for taxpayers who do not use direct deposit until they add or update bank account information. More than 500,000 taxpayers have received a letter from the IRS that gives them 30 days to respond, but the letter does not make clear that nonresponders may still wait six weeks for a paper check. Many people who rely on paper refunds are older, disabled, unbanked, or otherwise financially vulnerable. During the 2025 filing season, 93 percent of the 93,569,000 refunds issued by the IRS were deposited directly into accounts, , leaving roughly 6 million paper checks.
State refunds are slowing down for different reasons. Although the IRS says most e-filed federal refunds arrive within 21 days, there are reported delays of state refunds in Idaho, New York, Oregon, South Carolina, and Washington, DC, though the causes vary. Idaho is dealing with late-passing legislation to conform its state income tax to the new federal tax provisions enacted last year, while South Carolina and Washington, DC are sorting through how to handle those federal tax changes. Idaho processing is also slowed by fewer temporary workers, while Oregon says paper returns will not be processed until late March. In New York, some holdups appear tied to delays in Intuit software updates.
Sen. Booker floats a much larger standard deduction. Sen. Cory Booker (D-NJ) plans to introduce legislation that would raise the standard deduction to $75,000 for married couples, $37,500 for single filers, and $56,250 for heads of household. The proposal would also expand the child tax credit and add a one-time $2,400 benefit in the year a child is born. While not yet specified in bill language, Booker says he wants the plan fully paid for through higher taxes on upper-income households and large corporations and cracking down on tax avoidance schemes.
Maine candidates are offering bigger property tax fixes than lawmakers have so far. Candidates for governor are racing ahead of a legislative task force with far more sweeping property tax proposals. Ideas on the table include a tax freeze for some homeowners, a larger homestead exemption, and higher taxes on second homes owned by nonresidents. Broader income tax cuts are also on the table. Some proposals could face Maine constitutional questions, others could squeeze state revenue, and all of them would still have to get through the state legislature.
Colorado tries to build guardrails around a new federal school tax credit. State lawmakers are drafting rules for a new federal tax credit scholarship program after Gov. Jared Polis (D-CO) opted Colorado into the program. The federal program would give taxpayers a credit of up to $1,700 for donations to scholarship-granting organizations, which would then fund expenses for students in public or private schools. Colorado Democrats backing the state bill want public school organizations included and participating schools subject to nondiscrimination and disability-access rules.
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