Every year, more than 165 million Americans file their taxes with the Internal Revenue Service (IRS), with around two in three receiving refunds – making tax season one of the largest annual payments events in the United States. During the 2025 filing season alone, the tax season saw 93.5 million refunds issued to individual taxpayers.

The vast majority of these payments are delivered electronically, with 93% issued via direct deposit and the remainder sent by paper check. The figures reflect a broader push by the U.S. government to reduce reliance on checks, which are more than 16 times as likely to be lost, stolen, altered, or delayed, and can take six weeks or longer to arrive. By contrast, electronic refunds provide faster and more reliable access to funds, typically within 21 days for those who file electronically.

However, as one of the most anticipated payments of the year for many households and businesses, some financial institutions (FIs) and tax-preparing companies are moving to make the tax refund process match the expectations of today’s economy: seamless and instant. As a result, tax refunds are emerging as a compelling use case for real-time delivery via the RTP® network, the market-leading real-time payments infrastructure operated by The Clearing House.

From Fast to Instant: Rising Expectations for Access to Funds

Across the United States, consumers and businesses are becoming accustomed to immediacy in how they move and manage money. From digital wallet transfers and earned wage access for individuals, to real-time liquidity management and time-sensitive payments for corporates, the broader payments ecosystem is increasingly judged by speed and availability. As a result, expectations are shifting from “faster” services to truly “instant” payments – raising the bar for how quickly funds, including tax refunds, are made available.

For individuals, this shift is particularly pronounced. After several years of elevated inflation, many households continue to feel pressure on day-to-day finances, with many U.S. households living paycheck to paycheck. The ability to access funds immediately can make a meaningful difference – enabling people to pay bills promptly, reduce reliance on credit, and manage essential expenses with greater confidence.

For companies of all sizes, but especially for small to mid-sized businesses, liquidity remains a top concern in an environment where funding costs are higher, financial conditions are tighter, and uncertainty – from tariffs to shifting market dynamics – continues to disrupt normal operations. Immediate access to funds allows businesses to manage working capital more effectively, meet obligations without delay, and deploy capital precisely when it is needed, rather than a lengthy wait for payments to clear.

This same dynamic is increasingly applicable during tax season. While the underlying reasons may differ, the core need is the same: individuals and businesses are waiting for funds that are already owed to them, but not yet accessible.

How Instant Tax Payments are Taking Shape

Against this backdrop of rising expectations, the timing is right for tax refunds to go real-time. With over 1,200 financial institutions now live on the RTP network, instant payment capabilities are reaching a broad and expanding base of consumers and businesses. Adoption is accelerating, with the network surpassing 2 million payments in one day for the first time in February 2026.

This momentum is increasingly visible in tax-specific use cases. RTP-enabled refund payments have nearly doubled year-over-year, increasing 94% from over 1.2 million in Q1 2025 to 2.4 million in Q1 2026.

In practice, the difference lies in how and when funds are made available. In the traditional model, once an individual or business files their tax return, the IRS processes and approves any refund owed before sending the funds directly to the recipient; as noted above, mostly via direct deposit. While electronic delivery has improved speed and reliability, recipients must still wait for the IRS to complete processing before receiving their funds.

By contrast, in emerging real-time models enabled by the RTP network, an intermediary provides individuals and businesses with early access to their refund by advancing the funds, often on the same day, once the tax return is completed, submitted to the IRS, and approved. These funds are delivered instantly via the RTP network to individuals and businesses. The IRS continues to process the return in parallel, and once the official refund is released, it is sent to the intermediary to reimburse the advance.

This improvement is being enabled through a range of delivery models. In certain cases, banks offer instant refund capabilities directly to their customers, while in others, tax preparers, including some of the large, well-known household tax preparation providers, partner with FIs or private-label providers to enable near-instant disbursement.

A Growing Opportunity across the Tax Refund Ecosystem

As adoption of the RTP network increases and customer expectations for immediate banking services grow, instant tax refunds represent a clear competitive opportunity. The ability to offer immediate access to funds has the potential to attract and retain customers, differentiate in a crowded market, and enhance the overall client experience.

With year-over-year instant tax return transactions on the RTP network almost doubling in 2026, the market will likely continue to boom as more financial institutions join the RTP network and more tax preparation providers realize the competitive advantages that instant payments provide. For tax preparers, it means evaluating how instant refund capabilities can strengthen client relationships and support more compelling value propositions, while for banks and credit unions, the focus shifts to readiness – from supporting peak tax season volumes to exploring partnership opportunities. For individuals and small businesses, the benefit is clear: faster, more flexible access to money that is owed to them.