The U.S. federal government has taken a significant step toward fully digitizing its payment system. The government has decided that after September 30, 2025, no federal agency will issue or accept paper checks for its routine operations. This change will impact all government entities that issue payments or refunds, including the Internal Revenue Service (IRS).
This decision was made pursuant to Executive Order 14247, which was signed by Donald Trump on March 25, 2025. Titled “Modernizing Payments To and From America’s Bank Account,” the objective of this order is to transition the entire process of government payments and collections to electronic transfers. In essence, the government is now gradually prioritizing digital payments over paper checks.
A Major Shift for the IRS: How Tax Refunds Are Issued Will Change
Every year, millions of American citizens receive tax refunds, and the IRS plays a pivotal role in this process. During the 2025 tax season, the agency issued approximately 93.5 million tax refunds. Of these, about 93 percent were sent directly to bank accounts via direct deposit, allowing nearly 87 million people to receive their money quickly.
However, about 7 percent of people still relied on paper checks. In the upcoming 2026 tax season, these individuals will need to change their habits; if they do not provide their bank account details, they may face significantly longer wait times to receive their refunds.
Why Paper Checks Are Being Phased Out
The government maintains that paper checks are, in many instances, risky and slow. According to statistics, the likelihood of a paper check being lost, stolen, returned, or tampered with is approximately 16 times higher than that of an electronic payment.
Furthermore, there is a significant difference in processing time. With direct deposit, tax refunds are typically received within 21 days, whereas receiving the same funds via a paper check can take 6 weeks or longer. For families who rely on these funds to cover rent, debt, or essential expenses, such delays can cause significant hardship.
Recommendation to Adopt Direct Deposit
In September 2025, the IRS officially announced that paper checks for individual tax refunds would be phased out in the future. This decision was made in collaboration with the United States Department of the Treasury and was described as a step toward modernizing the payment system.
Under the new rule, taxpayers will be required to provide their bank account information for tax returns filed for the 2025 tax year (which will be filed in 2026). However, returns for prior years will not be affected by this rule.
Options for Those Without a Bank Account
The government has also established options for individuals who do not have a bank account. The Federal Deposit Insurance Corporation (FDIC) provides a list of banks where basic accounts can be opened even without a credit history. Additionally, many credit unions—as well as certain mobile apps and prepaid debit cards—accept direct deposits, provided they are associated with a unique routing number and account number.
Failure to Respond May Delay Refunds
If an individual files a tax return without providing bank account information, the IRS will send a letter within 30 days requesting the necessary details. If the taxpayer fails to respond—or does not qualify for a specific exemption—the agency may withhold the refund for approximately six weeks.
Subsequently, to avoid accruing interest, the IRS may ultimately issue a paper check. This means that paper checks will not be eliminated entirely; rather, they will be utilized solely as a last resort.
Exemptions Available in Special Circumstances
The IRS has also established exceptions for certain specific circumstances. These include individuals without access to banking services, persons with disabilities, citizens residing abroad, victims of domestic violence, or those whose religious beliefs preclude electronic payments. Each case will be reviewed on an individual basis.
Additionally, starting with the 2026 tax season, the IRS will introduce a new feature on its website allowing taxpayers to update their banking information directly through their online accounts. This will further streamline the process and enable taxpayers to receive their tax refunds more quickly than before.
FAQs
1. When will the U.S. government stop issuing paper checks?
The U.S. federal government will stop issuing paper checks for most payments starting September 30, 2025.
2. How will taxpayers receive their IRS refunds after this change?
Taxpayers will mainly receive refunds through direct deposit into their bank accounts.
3. What happens if someone files taxes without providing bank details?
The IRS will send a letter within 30 days asking for bank information or an exception request.
4. Can people without bank accounts still receive tax refunds?
Yes, they can open a basic bank account, use certain credit unions, or use approved prepaid debit cards that accept direct deposits.
5. Will paper checks disappear completely?
No, paper checks may still be issued in rare cases or approved exceptions, but they will only be used as a last resort.
