March 4, 2026, 5:30 a.m. ET
Tax refunds are the biggest pay day of the year for most Americans, but if you live in certain states or in Washington, DC, you may have to wait a little longer for that day.
President Donald Trump‘s signature tax and spending bill introduced a whole set of new tax breaks for middle class Americans in 2025, but some states are having a tough time implementing, or excluding, them. Software and tax forms must be updated to account for new provisions like the extra senior deduction, no tax on tips and overtime, and new auto loan interest deduction that the state has decided to follow. Meanwhile, the District of Columbia is mired in a battle with the federal government over whether it will conform at all to the new federal tax laws.
All of this means taxpayers, be warned: your state tax refunds could be delayed.
“State tax conformity will be the biggest hurdles as some states conform, some don’t conform and some only partially conform” to Trump’s new tax laws, said Richard Pon, certified public accountant in San Francisco.
Which states are warning of tax refund delays?
Taxpayers in four states plus the District of Columbia may see slower-than-usual tax refunds. Here’s why:
- Idaho: In a memo, Lori Wolff, administrator in the state’s Division of Financial Management, warned budget cuts reduced the temporary tax‑season workforce, which would slow tax processing by 12-24 weeks and delay taxpayer refunds by up to 6 weeks. The delays would cost taxpayers up to $7 million in increased refund‑interest payments, she said.
Further, Idaho Gov. Brad Little didn’t sign the state’s bill to conform to the federal tax laws until Feb. 11, after the start of the IRS’ Jan. 26 tax season and more than 158,000 Idahoans had already filed their taxes.
“The changes to forms and systems normally take nine months for the Tax Commission to complete,” said Tax Commission Chairman Jeff McCray in a release on Feb. 17. “However, it’s a priority for us to make the updates and provide a plan for taxpayers to follow as soon as possible.”
- New York: An Intuit TurboTax software issue, which was supposed to be fixed on Feb. 4, may have prevented filing and delayed some tax refunds, according to customer complaints on various message boards and local news reports.
- Oregon: Taxpayers filing paper returns won’t even begin being processed until at least the end of this month, the state’s Department of Revenue said. The first refunds won’t be issued until early April, it said. The IRS was late providing necessary tax forms and information for the state to program its computer systems, the Department said.
The Oregon Department of Revenue also said a “small number of taxpayers” claimed an incorrect amount for the Oregon Kids Credit due to a form error. Although it said the discovery was made early enough that refunds shouldn’t be delayed, it warned it would adjust, if necessary, the returns of those those who claimed the Oregon Kids Credit and one or more of the new federal deductions for overtime wages, tips and new car loan interest.
- South Carolina: The Palmetto State’s warning on its Department of Revenue website says tax processing is taking longer than usual because it’s not conforming to Trump’s new federal tax laws. Taxpayers need to be extra careful and adjust their state tax filings to add back income that may have been deducted at the federal level. Those may be tips, overtime, additional senior deduction and auto loan interest, among others, it said. If they are missed, taxpayers may have to file an amended return, which can delay a refund.
- Washington, DC: DC is embroiled in a fight with the federal government that has thrown tax filing into chaos. The District voted late last year not to conform to the new tax laws, but Congress voted to reverse that decision in the middle of tax season. Trump signed it into law on Feb. 18. “Electronic and paper versions of the 2025 District income tax forms will be delayed,” the Office of Tax and Revenue said on its website.
The DC Attorney General filed an opinion arguing that Congress’ reversal isn’t valid because the deadline had passed to make such a move, among other things. If the dispute doesn’t get resolved soon, DC Chief Financial Officer Glenn Lee said tax filing deadlines could be pushed to September and disrupt $400 million in cash flow for DC government.
Which way the dispute gets settled could have a big impact on DC taxpayers. About 60,000 individuals who have already filed their DC taxes may end up having to refile, the National Taxpayers Union Foundation said.
Plus, nearly 90% of taxpayers take the standard deduction, which is either $15,750 if Congress is right, or $15,000 if DC wins, it said. The local child tax credit is either $0 if Congress is correct or $420 per child if DC gets its way, said the nonpartisan research and educational organization.
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.