The IRS and U.S. Department of the Treasury have announced a major change in how individual taxpayers will receive federal tax refunds. Beginning Sept. 30, 2025, the IRS will begin phasing out paper refund checks, transitioning to electronic payments as the default method for issuing refunds. This initiative is part of a broader effort under Executive Order 14247 – Modernizing Payments To and From America’s Bank Account, aimed at improving the speed, security, and efficiency of federal payments.
Key Takeaways
Electronic Refunds Become Standard
Starting with tax returns filed after Sept. 30, the IRS will issue most refunds via direct deposit or other electronic methods. Paper checks will be discontinued except in limited, hardship-based circumstances.
Security & Efficiency
Electronic payments are significantly more secure and cost-effective. According to the IRS, paper checks are more than 16 times more likely to be lost, stolen, or delayed compared to direct deposit.
Faster Refunds
Taxpayers who opt for electronic refunds typically receive their payments within 21 days, while paper checks may take six weeks or longer.
Support For Unbanked Taxpayers
The Treasury is exploring alternative payment options such as prepaid debit cards and digital wallets to ensure all taxpayers can access their refunds.
No Change To Filing Process
Taxpayers will continue to file returns using current methods. The change affects only the delivery method of refunds.
What’s Next?
The IRS will issue additional guidance ahead of the 2026 filing season. Treasury has issued a Request for Information (RFI) seeking public input on implementation strategies, particularly for reaching unbanked and underbanked populations.
GBQ Insight
This transition reflects a broader federal push toward digital modernization. The IRS is continuing to expand electronic payment options to make it easier, faster, and more secure for individuals and businesses to pay taxes. Until further notice, existing forms and procedures should be used to make payments to the IRS. To avoid delays, taxpayers should use existing electronic payment options.
Taxpayers and advisors should begin preparing now to ensure a smooth transition. GBQ will continue to monitor developments and provide updates as new guidance becomes available.
By Scott Eichar, CPA, CFP, PFS, Partner, Tax & Advisory
