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Tax season is already stressful, and this year the IRS is urging Americans to pay close attention to new changes that could affect their refunds.
Between payment modernization efforts and provisions in the One Big Beautiful Bill Act (OBBBA), the way you receive money from the government may look different. The goal is to streamline processes and potentially help you keep more cash in your wallet, but preparation will be key.
Here's what taxpayers should understand before filing in 2026.
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The IRS is modernizing its payment system and eliminating paper checks
The U.S. Department of the Treasury, working alongside the IRS and other federal agencies, is shifting federal payments to electronic methods under Executive Order 14247, signed March 25, 2025. The transition applies both to money the government sends out — such as tax refunds, benefits, grants, and contractor payments — and to money individuals and businesses send in, including tax payments, penalties, and fees.
Electronic transactions are generally faster, less expensive to process, and less prone to clerical errors than paper checks. The IRS has noted that limited exceptions will remain available for hardship cases or situations involving legal or procedural constraints. Still, the broader direction is clear — digital payments will become the default for most taxpayers.
The way you file taxes will stay the same
While payment methods are changing, the IRS has emphasized that how you prepare and submit your tax return is not being overhauled. Taxpayers will continue to file their returns using the same methods they have in previous years, whether that means filing electronically through tax software or mailing a paper return.
The executive order focuses on how refunds are distributed and how tax payments are remitted, not on the filing process itself. For the 2026 filing season, paper checks and money orders only will still be accepted. However, over time, electronic methods are expected to become more common for both refunds and payments.
How to prepare for IRS changes before filing your taxes
The IRS is encouraging taxpayers to take proactive steps now to avoid refund delays. One of the most important actions is opting for direct deposit and ensuring your bank account or prepaid debit card information is accurate when filing. Even a small routing number error can result in complications.
For those who owe taxes, electronic payment options such as IRS Direct Pay, the Electronic Federal Tax Payment System, and other approved digital tools are recommended. Taxpayers should also review their account information to confirm it is current. The IRS website offers guidance on electronic payment options, including resources for individuals who do not currently have a traditional bank account.
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Taxpayers can expect larger refunds thanks to the OBBBA
Beyond payment modernization, several provisions in the One Big Beautiful Bill Act (OBBBA) may affect refund amounts for the 2026 filing season. The legislation includes changes that benefit certain wage earners, including those with income from tips or overtime, as well as expanded deductions and credits for qualifying individuals.
According to analysis from the nonpartisan Tax Foundation, the average filer could see refunds increase by roughly $300 to $1,000 compared with the previous year. That estimate assumes taxpayers claim all eligible deductions and file accurately. Many of the new provisions include income thresholds and phaseouts, which means careful preparation matters more than ever.
For some households, especially those in the middle and upper-middle income brackets, the combined impact of larger standard deductions and other tax relief measures could significantly boost refund totals. However, eligibility varies, and overestimating benefits could lead to disappointment if documentation is incomplete or income exceeds certain limits.
How to strategically use your tax refund
If your refund is larger this year, how you use it can shape your financial future. Paying off high-interest debt, such as credit card balances, is one of the most high-impact things you can do. Then, building or replenishing an emergency fund can provide stability during economic uncertainty.
For those who have already addressed short-term financial needs, investing the refund in a retirement account or diversified portfolio may support long-term growth. Even modest investments can compound meaningfully over time. The key is to treat a refund as an opportunity rather than a windfall.
Bottom line
The IRS is modernizing how it processes refunds and payments, and new tax law changes could influence how much you receive. Electronic payments are becoming the standard, while expanded deductions under the OBBBA may result in higher refunds for some taxpayers.
Taking time to verify your banking information, review eligibility for new tax provisions, and plan how to use your refund can help you get ahead financially. With thoughtful preparation, this year's filing season could be smoother — and potentially more rewarding — than expected.
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