The Internal Revenue Service will phase out paper tax refund checks for individual taxpayers beginning September 30, 2025. The transition, mandated by Executive Order 14247, directs the agency to move toward electronic payments “to the extent permitted by law.”
According to IRS data from the 2025 filing season, about 7% of taxpayers — roughly 6.5 million individuals — still receive refunds by paper check. The remaining 93% already receive their refunds through direct deposit.
In its announcement, the IRS noted that paper checks are more likely to be lost, stolen, altered, or delayed compared with electronic payments. The agency added that direct deposit avoids the issue of undeliverable refund checks being returned.
The IRS said it will publish detailed guidance before the 2026 filing season begins. Until then, existing forms and procedures remain in effect, including for those filing 2024 returns on extension through December 31, 2025.
Impact on Tax Refund Timeline
The shift to electronic payments creates a notable difference in refund processing times. Electronic refunds are typically issued within 21 days for taxpayers who file electronically and choose direct deposit, assuming no issues with their return.
In contrast, paper check refunds can take six weeks or longer to arrive by mail. This timing difference becomes particularly relevant for business owners and high earners who may be managing quarterly tax payments or planning cash flow around expected refunds.
During the 2025 tax filing season, the IRS issued more than 93.5 million tax refunds to individual income tax filers. Of these, almost 87 million refunds went out through direct deposit, while only about 6.5 million were mailed as paper checks.
Options for Taxpayers Without Bank Accounts
The IRS acknowledged that not all taxpayers have traditional banking relationships and outlined several alternatives. These include prepaid debit cards, digital wallets, and what the agency described as “limited exceptions” for specific circumstances.
The agency directed taxpayers to resources such as the FDIC’s GetBanked program and MyCreditUnion.gov, noting that these platforms provide tools to compare banking products and identify institutions that offer low-cost account options.
Specific criteria for exceptions and alternative payment methods will be detailed in forthcoming IRS guidance ahead of the 2026 filing season.
Broader Payment Changes Coming
The executive order also applies to payments made to the IRS, meaning the agency will eventually move away from accepting paper checks for tax payments as well. However, taxpayers should continue using existing payment options until the IRS issues additional guidance.
The change is part of a government-wide initiative aimed at reducing costs and improving efficiency. According to the Treasury Department, electronic payments cost less to process than paper checks and lower the administrative burden on federal agencies.
For businesses that interact frequently with the IRS through quarterly payments or other transactions, the shift toward electronic processing may result in fewer administrative steps over time.
The IRS plans to share updated guidance on IRS.gov and through nationwide outreach efforts as the implementation date approaches.
Source: IRS to phase out paper tax refund checks starting with individual taxpayers