Why State Tax Refunds Are Slower in 2026

Several factors are contributing to slower refund processing this year.

One major reason is the impact of recent federal tax law changes passed in 2025. Many states must decide whether to adopt or modify these changes in their own tax systems. That process has required updates to tax forms, calculations, and software.

At the same time, many state tax agencies are still dealing with:

• outdated computer systems
• manual review requirements
• staffing shortages
• higher fraud-prevention checks

These challenges have created backlogs that are delaying refund payments in some regions.