In a recent News Release, the IRS announced that it will begin phasing out paper refund checks beginning on September 30, 2025, as required by Executive Order 14247. The order, which was signed on March 25, 2025, by President Trump, centered on paper-based payments by the Federal Government (including both checks and money orders).
In order to cut the budget, and save approximately $657 million dollars in a single year, all federal government payments will transition to electronic funds transfer (EFT) transactions, to the extent permissible under applicable laws. Additional information about the federal agencies’ plans to transition to fully electronic payments can be found at: Modernizing Payments To and From America’s Bank Account
Tax Implications
To maintain compliance with the order, the IRS recently announced a phasing out period of paper transactions beginning September 30, 2025. The first phase will be directed towards individual taxpayers, who will no longer be able to receive their tax refunds via check, starting in the 2026 tax year. By instituting these new procedures, the IRS hopes to increase efficiency of refund processing and protect taxpayers from various sources of fraud and errors.
Exceptions:
Although mandatory in many situations, the government has provided a list of individuals and circumstances that can be exempted from this requirement, including:
- Individuals without banking services
- Emergency Payments
- Security issues that would require non-EFT transactions
The IRS offers a few payment options for individuals without bank accounts to receive their refunds, including prepaid debit cards or digital wallets. The IRS has also provided information on how to create a free, or low-cost, bank account online to receive refunds.
According to the IRS, most individual taxpayers already receive their refunds by direct deposit into their bank accounts. During the 2025 tax filing season, of the more than 93.5 million tax refunds paid to individual income tax filers, almost 87 million refunds were issued through direct deposit – only 7% of individual refund recipients received their refunds by check through the mail. The release further notes that the changes also apply to payments made to the IRS.
Additional guidance for 2025 tax returns will be provided before the 2026 filing season begins. During this transition period, the IRS advises taxpayers to continue using existing forms and procedures, including those filing any 2024 returns on extension of a due date before 12/31/25.
Contact your GYF Tax Executive at 412-338-9300 if you have questions or need assistance.
