IRS Begins 2025 Tax Processing, Warns of Refund Delays Amid Staff Cuts

The IRS began processing 2025 tax returns on January 27, 2026, with experts warning taxpayers to file early and accurately to avoid delays exacerbated by agency staff reductions and new tax code changes. Refunds for electronic filers typically take up to 21 days, but those claiming Earned Income or Child Tax Credits may not receive payments until mid-February to March 3 due to PATH Act fraud reviews. New provisions under the "One Big Beautiful Bill" are expected to increase average refunds by 15-20%, according to Morgan Stanley analysis. However, IRS layoffs in 2025 and complex new deductions could cause significant processing delays. Taxpayers are advised to file electronically with direct deposit for fastest refund receipt, as paper filings can take up to six weeks.