A recent executive order has set the stage for all federal payments and disbursements to transition fully to electronic delivery. If you currently make or receive any federal payments, including federal tax return refunds and payments, Social Security payments, benefits payments, and vendor payments, you’ll soon be required to make/receive those payments via electronic funds transfer (EFT) methods like direct deposit, debit/credit card payments, digital wallets or a government-issued debit card.
In this article:
- Paper checks will be phased out. This applies to all federal programs, including federal tax return refunds and payments.
- Electronic payments are faster, more secure, and reduce administrative costs for the government.
- If you or a family member still receive checks by mail, steps will need to be taken to enroll in an electronic payment method.
Why is the IRS Phasing Out Paper Checks?
An executive order issued in March is ushering in a major change for taxpayers: the IRS is phasing out paper checks starting October 1, 2025. This modernization effort aims to improve efficiency, reduce fraud, and lower costs—but it also raises important questions for millions of Americans who still rely on paper refunds.
The IRS has long struggled with paper processing inefficiencies. Paper refund checks are 16 times more likely to be lost, stolen, or altered than electronic payments. Executive Order 14247 mandates that all federal disbursements—including tax refunds—transition to electronic payments by September 30, 2025.
The IRS announced in September that paper tax refund checks for individual taxpayers would be phased out beginning on Sept. 30, 2025, and will publish detailed guidance for 2025 tax returns before the 2026 filing season begins. Most taxpayers already receive refunds via direct deposit, but if you currently receive paper checks, you’ll need to take action to avoid delays.
The Social Security Administration announced its plans to comply. You can read more from SSA here.
Exceptions & Vulnerable Groups
The IRS recognizes that not all taxpayers can easily transition to electronic payments. Exceptions will be available for taxpayers who face barriers to digital banking. These include:
- Unbanked or underbanked individuals
- Americans living abroad
- Incarcerated taxpayers
- ITIN holders
- Religious groups avoiding electronic systems
- Victims of domestic violence
- Individuals with disabilities
The IRS will provide instructions via mail and online tools, but note that agents cannot accept bank info over the phone for security reasons.
How to Prepare for Refunds
To avoid refund delays in 2026, we strongly recommend setting up direct deposit with the IRS. If you file your 2025 return without direct deposit info, the IRS will hold your refund for six weeks unless you qualify for an exception. It is anticipated that the IRS will send taxpayers a letter asking them to provide or update their banking information within 30 days if their return fails to include the information or if the direct deposit has been rejected by their bank.
Taxpayers can also check the Where’s My Refund? app, which will include a statement directing the taxpayer to provide bank information or to call to request an exception if the bank information is missing. It is expected by year-end that the IRS will provide additional guidance on requesting an exception and will have updated the Individual Online Account functionality to allow taxpayers to upload their bank information for direct deposit of their refunds.
What Taxpayers Who Need to Make Payments Should Know
No Immediate Change for Payments Until 2027
While the executive order mandates that all federal disbursements (like refunds) transition to electronic payments by September 30, 2025, the IRS has clarified that incoming payments from taxpayers (i.e., payments to the IRS) will continue to be accepted via existing methods—including paper checks—until at least 2027.
However, the IRS is encouraging taxpayers to begin transitioning to electronic payment methods now to avoid future disruptions.
Accepted Electronic Payment Methods
Taxpayers can already use several secure options to make payments electronically:
- IRS Direct Pay: For one-time payments from a bank account without creating an account.
- Electronic Federal Tax Payment System (EFTPS): Recommended for businesses and recurring payments.
- Debit/Credit Card Payments: Through IRS-approved processors.
- IRS Online Account: Allows taxpayers to manage payments, view balances, and update banking info.
- Digital Wallets: Some platforms now support IRS payments.
- Prepaid Debit Cards: May be issued by the Treasury for unbanked individuals in the future.
You can download our electronic payment instruction guide for the IRS and state payments here.
What to Expect Going Forward
- Paper checks for payments will be phased out, but not until the IRS updates its infrastructure and forms—likely starting in 2027.
- Exceptions will be available for those who cannot use electronic methods due to disability, geographic limitations, or religious beliefs.
- The IRS will provide additional guidance before the 2026 filing season.
Final Thoughts
The IRS phasing out paper checks is a step toward a more secure and efficient tax system. But modernization must be equitable. This change may affect you or someone in your household, so it’s a good time to review how you make or receive any federal payments and make sure your banking information is up to date.
Need assistance? We’re here to help you navigate this transition. If you have questions or need assistance setting up electronic payments, please don’t hesitate to reach out.