Trump Bump: Tax refunds jumped 17% after president’s signature law, GAO reports

The Internal Revenue Service issued $296 billion in refunds during the 2026 filing season, a 17% increase from the previous year, as millions of Americans benefited from President Donald Trump's signature tax law, according to a new Government Accountability Office report.

The increase represented $43 billion more in refunds than the IRS had issued during the 2025 filing season for tax year 2024. The average refund also increased by $333, or 11%, compared with the previous year, according to the full report.

The GAO attributed the larger refunds, in part, to millions of taxpayers claiming new deductions created by recent tax law changes in Trump's One Big Beautiful Bill Act (OBBB), including provisions allowing deductions for qualified tips and overtime.

The IRS also issued more refunds overall, sending out more than 8 million additional refunds compared with 2025.

The increase in refunds came as the agency faced delays affecting taxpayers who received their money by paper check.

The GAO found that the IRS's overall processing performance had remained similar to the previous year, with the agency processing about 98% of the 177 million individual and business returns it had received during the filing season.

Still, taxpayers who had filed paper returns or relied on paper refund checks had faced significant delays.

"Most paper check refunds were delayed by weeks," the GAO reported, as the IRS had moved toward issuing refunds primarily through direct deposit.

The IRS sent approximately 4.2 million notices to taxpayers by early May asking them to provide bank account information to allow for electronic delivery of their refunds.

Taxpayers who had not responded were told they would receive a paper check after six weeks.

As a result, the number of paper-check refunds issued by early April had plunged more than 80%, from about 2.8 million in 2025 to roughly 493,000 in 2026. Those who had received paper checks waited an average of 36 days, compared with 13 days the previous year.

The GAO found that the IRS had therefore taken about three times longer to issue paper-check refunds than it had in 2025.

Taxpayers using direct deposit generally avoided the worst of the delays.

According to the report, nine out of 10 refunds issued through direct deposit had arrived within 21 days.

Paper returns faced longer delays

The refund increase came despite continuing operational problems inside the IRS.

The IRS's Submission Processing unit ended the filing season with 8,111 employees, 18% fewer than the 9,850 employees it had at the end of the previous filing season.

IRS officials told the GAO that the unit did not have enough employees "to process returns timely."

Business returns were the hardest hit due to staffing issues, the GAO found. The average processing time for business Form 941 returns had risen to 72 days in 2026, compared with 45 days in 2025 and 25 days in 2024. The IRS's stated target had been 32 days.

Individual paper returns had taken an average of 30 days to process, more than twice the agency's 13-working-day target.

The agency had received 8.9 million paper returns during the filing season, down 19% from 2025. However, IRS employees had processed 46% fewer individual paper returns and 80% fewer business paper returns, the GAO reported.

The watchdog identified both technology problems and staffing shortages as major factors.

"IRS’s individual paper processing system was unable to process tax year 2025 returns for the first 6 weeks of 2026, and its scanning system for business paper returns was unable to process tax year 2025 returns for the entire 2026 filing season, according to IRS officials," read the report.

According to the new GAO report, IRS officials told GAO staff that the systems were not ready when filing season began due to the loss of experienced IT acquisition employees.

The IRS had attempted to compensate by relying more heavily on outside vendors. It had sent approximately 3.7 million business paper returns to vendors for scanning, which is a 725% increase from the 443,000 sent the previous year.

Taxpayers continue to flock to IRS online tools

As access to live IRS assistance had declined, taxpayers had increasingly relied on the agency's online tools.

The IRS recorded approximately 155 million successful logins to individual online accounts through April 2026, which was the highest level in the six-year period studied by the GAO.

The "Where's My Refund?" tool also received 346 million visits during the filing season, which was a 9% increase from 2025.

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