IRS to Phase Out Paper Refund Checks Under Executive Order

On March 25, 2025, President Donald Trump issued Executive Order 14247 which was issued to help prevent theft of tax refunds and to reduce the cost and infrastructure needed to continue processing paper checks. The executive order also mandated that the phase out of paper checks and disbursements should begin on September 30, 2025. The executive order granted limited exceptions from the electric payment and receipt requirements for:

• Individuals who do not have access to banking services or electronic payment systems
• Emergency payments where electronic disbursement would cause undue hardship
• National security or law-enforcement related activities where non-EFT transactions are necessary or desirable
• “Other circumstances as determined by the Secretary of the Treasury, as reflected in regulations or other guidance”

IRS Guidance

The executive order set forth that the Secretary of the Treasury had to have an implementation report ready within 180 days of the  executive order being filed. The IRS on September 23, 2025, issued their first news release (IR-2025-94) addressing the executive order.   According to the IRS release:

• Paper tax refund checks for individual taxpayers will be phased out beginning on Sept. 30, 2025 as required by the executive order.
• The IRS will publish detailed guidance for 2025 tax returns before the 2026 filing season begins, but until further notice, taxpayers may continue using existing forms and procedures, including those filing their 2024 returns on extension of a due date prior to December 31, 2025.
• The change is designed to protect taxpayers, speed up refunds, and cut costs.
• Most refunds will be delivered by direct deposit or other secure electronic method, but options such as prepaid debit cards, digital wallets, or limited exceptions will be available.
• Taxpayers should make sure they know their bank information or consider opening a free or low-cost account using resources like FDIC’s “GetBanked” initiative and MyCreditUnion.gov for options.
• Executive Order 14247 also applies to payments made to the IRS, but taxpayers may continue to use existing payment options until further notice. 

Most individual taxpayers already receive their refunds by direct deposit into their bank accounts. During the 2025 tax filing season, the IRS issued more than 93.5 million tax refunds to individual income tax filers, and 93% of those, almost 87 million refunds, were issued through direct deposit. Only 7 percent of individual refund recipients received their refunds by check through the mail.

Implications and Next Steps

It is important to note that the executive order also applies to payments made to the IRS. The order calls for all payments made to the Federal Government to be processed electronically as soon as practicable. While the initial IRS announcement focuses on refunds, tax professionals and taxpayers should anticipate future guidance regarding the eventual phasing out of paper check payments for tax liabilities. Taxpayers should continue using existing payment options until further notice is issued. The move toward comprehensive electronic transactions represents a significant modernization effort across the federal government.