The 2026 tax filing season in the United States has revealed an unusual pattern. Refund amounts are increasing, yet the number of tax returns being processed has dropped compared to last year. As of early February, the Internal Revenue Service had received about 22.3 million returns. That figure represents a decline from the same period in 2025. Even more noticeable is the drop in processed returns, which fell by over 12 percent compared to last year’s early-season numbers.

At the same time, the average refund has grown. Early data shows the typical refund has climbed above $2,200, marking a significant increase from last year. For taxpayers waiting on their money, this combination of higher refunds and slower processing has raised many questions.

Why Processing Has Slowed Down

One of the main reasons for slower processing is reduced staffing within the IRS. Reports indicate that the agency’s workforce has declined in several key areas, including information technology and taxpayer services. Fewer employees mean longer processing times and potentially longer wait times for customer support.

The agency is also carrying over unresolved cases from previous years. This backlog adds extra pressure during peak filing season. Although early comparisons can sometimes be misleading, analysts believe the decline in processed returns this year is more noticeable than normal seasonal differences.

As the April filing deadline approaches, processing capacity may face additional strain, especially if filing volumes increase sharply in March and early April.

Why Refund Amounts Are Rising

Despite slower processing, refund amounts have increased compared to last year. The average refund has risen by more than ten percent. Several tax policy changes are contributing to this shift.

Recent adjustments to tax deductions have played a major role. The standard deduction has increased for the 2025 tax year, reducing taxable income for many households. Certain workers, including those in service industries who receive tips, may now deduct a portion of qualified tip income. Overtime earnings deductions have also been expanded for eligible employees.

These changes lower taxable income and can lead to larger refunds, depending on individual filing circumstances. As a result, taxpayers who have already received refunds are seeing higher average payments compared to previous seasons.

Credits That Affect Early Refund Totals

Refunds connected to the Earned Income Tax Credit and the Additional Child Tax Credit are subject to a federal rule that prevents early issuance. The IRS cannot release these payments before mid-February. Because millions of taxpayers claim these credits, early-season totals may appear lower than they will later in the season.

Once these held refunds are released, overall refund numbers are expected to increase significantly. This pattern occurs each year but can create confusion during the first few weeks of filing season.

Changes to Paper Check Refunds

Another notable update for 2026 involves paper check refunds. The IRS has announced stricter rules for issuing paper checks, encouraging taxpayers to use direct deposit instead. This shift may affect individuals without bank accounts or those who prefer traditional checks.

Direct deposit remains the fastest and most reliable way to receive a refund. Electronic payments generally arrive within about 21 days for straightforward returns, while paper filings and mailed checks can take much longer.

Which Returns Face the Most Delays

Not all tax returns are processed at the same speed. Simple electronic filings with accurate information continue to move through the system relatively quickly. However, paper returns, amended returns, and those flagged for identity verification face longer delays.

Identity theft checks are another factor that can slow processing. If the IRS system detects unusual activity, it may pause the refund until identity confirmation is completed. Amended returns can take several months to finalize.

Planning Ahead

Tax experts suggest filing early, choosing electronic filing, and selecting direct deposit to reduce the risk of delays. Using the official “Where’s My Refund?” tool helps taxpayers track their status and stay informed.

Although refunds are higher this year, patience may be necessary as processing times vary. Understanding the reasons behind both larger refunds and slower processing can help taxpayers plan more effectively.

Disclaimer: This article is for general informational purposes only and does not provide tax, legal, or financial advice. Refund amounts and processing timelines vary based on individual circumstances and current tax laws. Readers should consult a qualified tax professional or visit the official IRS website for the most accurate and updated information.