Legacy Law Blog

Beginning Sept. 30, 2025, the Internal Revenue Service (IRS) stopped issuing paper tax refund checks and moved entirely to electronic refund payments.

This major transition is part of a broader federal initiative under Executive Order 14247, titled, “Modernizing Payments to and from America’s Bank Account,” which aims to make all federal disbursements fully electronic.​

Why This Change is Happening

The shift to electronic payments is driven by three major policy goals:​

• Fraud prevention and security: Paper checks are over 16 times more likely to be lost, stolen, altered or delayed compared to direct deposit or other electronic methods. Digital transactions ensure funds go directly to verified accounts, reducing fraud risk.
• Faster refunds: Taxpayers who file electronically and choose direct deposit can expect refunds in less than 21 days, compared to six weeks or longer for mailed checks.
• Lower government costs: Electronic transfers save the IRS and U.S. Department of Treasury (Treasury) millions of dollars annually in paper, postage and administrative handling costs.

What Taxpayers Should Expect

The Sept. 30 deadline applies initially to individual taxpayers, affecting roughly 6.5 million people who still receive paper refund checks each year. Starting with the 2026 filing season, those refunds will be issued only through direct deposit, prepaid debit cards or approved digital wallets.​

Taxpayers can still file their 2024 returns on paper or extension until Dec. 31, but beginning with 2025 returns filed in 2026, refunds will be electronic-only.​

Preparing for the Transition

To avoid refund delays, taxpayers should take the following steps now:​

• Verify or update banking details with the IRS (through a recent tax return or IRS online account).
• Consider opening a free or low-cost bank account if unbanked.
• Explore alternative options such as prepaid debit cards, Treasury’s Direct Express Debit Mastercard or digital wallets.
• Ensure electronic filing software or tax preparers are updated for the 2026 season.

Limited Exceptions

Executive Order 14247 allows limited exceptions to the electronic refund rule for individuals who lack access to U.S.-based banking systems, face undue hardship or for designated national security or law enforcement transactions. Treasury guidance before the 2026 filing season will clarify the process for requesting such exceptions.​

Looking Ahead

While refunds are the first step, tax payments will also gradually move to electronic-only processing later this decade. Treasury anticipates requiring all payments to the IRS — including estimated taxes and balances due — to be made electronically by 2027 or thereafter.​

The upcoming paperless transition marks a major modernization milestone for both taxpayers and federal operations, promising faster, safer and more efficient tax refund delivery heading into the 2026 tax year and beyond.