October 2024 brought new IRS direct deposit rules for tax refunds

Starting in October 2024, the IRS changed how it handles direct deposit refunds. The most significant change: the IRS now requires a savings account or money market account for direct deposit, rather than allowing refunds to go to checking accounts, prepaid cards, or other account types. If you filed a return requesting direct deposit to a checking account before this date, that instruction remains valid. But any new direct deposit requests or changes made after October 1, 2024 must use a savings or money market account.

This shift affects anyone planning to receive a tax refund by direct deposit going forward. The IRS made this change to reduce fraud and identity theft, since savings accounts have different security protocols than checking accounts. If you typically use checking for your refund, you now have a choice: open a savings account at your bank, use a money market account if you have one, or request a paper check instead.

Key Takeaways

  • As of October 1, 2024, the IRS only accepts direct deposit refunds to savings accounts or money market accounts, not checking accounts.
  • Refund instructions you filed before October 1, 2024 are grandfathered in and will still go to your checking account if that is what you requested.
  • If you need to change your direct deposit information or file a new return after October 1, you must provide a savings or money market account number.
  • You can still request a paper check if you do not have a savings account or prefer not to use one for your refund.
  • The change applies only to federal tax refunds; it does not affect how you pay taxes or how the IRS processes payments you send to them.

Why the IRS made this change

The IRS cited fraud prevention as the reason for restricting direct deposit to savings accounts. Checking accounts are used more frequently for everyday transactions, which means they have more activity and more opportunities for unauthorized access. Savings accounts typically have fewer transactions and stricter withdrawal rules, making them harder targets for identity thieves and scammers.

The agency also noted that this change aligns with security practices used by other financial institutions and government programs. By narrowing the account types it accepts, the IRS reduces the number of pathways criminals can use to intercept refunds or commit refund fraud.

What happens if you already filed with a checking account

If you filed your 2023 tax return (or any earlier return) and requested direct deposit to a checking account, that instruction is still valid. The IRS will not change your existing direct deposit information. Your refund will go to the checking account you specified, even though new requests cannot use checking accounts.

This grandfathering means you do not need to do anything if your current setup is working. However, if you amend your return, file an extension, or need to update your direct deposit information for any reason after October 1, 2024, you will need to provide a savings or money market account instead.

How to set up direct deposit to a savings account

If you do not yet have a savings account, you can open one at any bank or credit union. You will need your routing number (a nine-digit code that identifies your bank) and your account number (usually 10 to 12 digits). Both appear on the bottom left of your checks, or you can call your bank or log into your online banking portal to find them.

When you file your tax return, you will enter this information in the direct deposit section. Make sure you select "savings account" as the account type, not checking. Double-check the routing and account numbers before submitting, since errors can delay your refund or send it to the wrong place.

If you use tax software or a tax professional to file, they will ask you to specify the account type during the filing process. If you file by mail using Form 1040, you will fill in the account type on the form itself.

Alternatives if you do not have a savings account

You have two main options if you do not want to open a savings account or do not have access to one. The first is to request a paper check. The IRS will mail your refund to the address on your return, though this typically takes longer than direct deposit—usually four to six weeks or more depending on mail delays.

The second option is to open a savings account specifically for receiving your refund. Many banks offer no-fee savings accounts that you can open online in minutes. You do not need to keep money in the account after your refund arrives; you can transfer it to checking or withdraw it once the deposit clears. This route is faster than waiting for a check and gives you the security of direct deposit.

Money market accounts and other account types

The IRS accepts direct deposit to money market accounts, which are a hybrid between savings and checking accounts. If you already have a money market account, you can use it for your refund. The process is the same: provide your routing number, account number, and specify "money market" as the account type when filing.

The IRS does not accept direct deposit to prepaid cards, individual retirement accounts (IRAs), health savings accounts (HSAs), or any other account type. If you have been using one of these for your refund, you will need to switch to a savings or money market account, or request a paper check.

Timing and when to expect your refund

Direct deposit refunds typically arrive within 21 days of the IRS accepting your return, though many arrive faster. The exact timing depends on when you file, whether the IRS needs to verify information on your return, and your bank's processing time. The account type (savings versus checking) does not change this timeline.

You can track your refund status using the IRS Where's My Refund tool on the IRS website. This tool updates once a day and will tell you whether your refund has been accepted, is being processed, or has been sent to your bank. If there is a problem with your direct deposit information, the IRS will contact you by mail.

Frequently Asked Questions

Will my refund be delayed because of the new direct deposit rule?

No. The new rule does not change how fast the IRS processes refunds. Direct deposit to a savings account works just as quickly as it did to checking accounts. The only delay occurs if you need to open a new savings account first, which typically takes a few business days.

Can I use a joint savings account for my refund?

Yes. You can use any savings account in your name or a joint account where you are listed as an owner. Provide the routing number and account number as you normally would. If the account is in someone else's name only, the refund may be delayed or rejected.

What if I filed my return before October 1 but have not received my refund yet?

Your refund will still go to the account type you originally requested. The October 1 change only applies to new requests and changes filed after that date. If your refund has not arrived, use the IRS Where's My Refund tool to check the status.

Do I need to update my direct deposit information for next year?

Only if you want to change the account or account type. If you filed for 2024 with a checking account before October 1, 2024, that instruction is locked in and will not change. If you file for 2025 and want to use a different account, you will need to provide a savings or money market account number.

Can I use a business savings account for my personal tax refund?

No. Your refund must go to an account in your personal name. Business accounts are not accepted, even if you are the owner of the business. If you are self-employed, use your personal savings account.