The Bottom Line Up Front: What You Need to Know Now
The IRS, in coordination with the U.S. Department of the Treasury, officially announced that paper tax refund checks for individual taxpayers will be phased out. This became effective September 30, 2025, and marks the first step in a major government-wide initiative to promote electronic payments.
This mandate isn’t just about how you get your refund. It’s a directive from Executive Order 14247, signed by President Donald Trump, to modernize all federal payments. These payments include both disbursements to you (such as tax refunds) and, crucially, receipts from you (such as tax payments).
So, what does this mean for your immediate tax filings? You should continue using existing forms and procedures for any 2024 returns you’re filing on extension before December 31, 2025. The new rules primarily apply to 2025 tax returns that you’ll file next year.
Why the IRS is Making This Change: Efficiency & Security
From a business perspective, the government’s reasons for this move are logical and align with best practices. Electronic payments are simply more efficient and secure.
- The Cost of Paper (Dollars and Time): According to the U.S. Department of the Treasury, issuing a paper check costs about $0.50, while an electronic payment costs less than $0.15. This shift is expected to save American taxpayers hundreds of millions of dollars. The IRS also noted that maintaining the physical infrastructure for paper records costs over $657 million in fiscal year 2024 alone.
- Reducing Risk and Fraud: The transition also marks a significant step in combating fraud. Historically, a paper check is 16 times more likely to be lost, stolen, or altered compared to an electronic funds transfer. As a business owner, you know that minimizing fraud serves your best interests.
- Speed for Your Tax Refund: For those who prefer a paper check, the IRS states that your tax refund may take six weeks or longer to arrive. An electronic tax refund, however, is typically issued within 21 days or less if you file electronically and provide direct deposit information. For any business, faster access to cash flow is always a benefit.
Your Options for Receiving Future Tax Refunds
The IRS claims that most taxpayers are already on board. During the 2025 tax filing season, an impressive 93% of individual tax refunds were issued via direct deposit.
For your future filings, direct deposit is the fastest, safest, and now, the standard method. If you don’t have a traditional bank account, you may be able to use a prepaid debit card or even some payment apps to receive your refund. Be sure to check with your financial institution or app to obtain the correct routing and account numbers, as they may differ from the numbers on your physical card.
There are, however, limited exceptions. The IRS acknowledges that some taxpayers, known as “unbanked persons,” may not have access to a traditional checking or savings account. Waivers may be granted for those who can prove that an electronic payment would cause undue hardship.
The Impact on Your Business Payments
The IRS is clear: the mandate applies to both disbursements and receipts. This means that just as the government is moving away from sending you paper checks, it will eventually stop accepting them from you.
If you are a business owner who still pays estimated, quarterly, or payroll taxes by check, this is your wake-up call. Now is the time to transition to electronic payments. Not only is it more secure and efficient, but it will also be required for continued tax compliance in the near future. The IRS already has a robust electronic payment system, such as the Electronic Federal Tax Payment System (EFTPS), that businesses can use to schedule payments in advance and ensure they arrive on time.
Key Takeaways & Your Next Steps Checklist
The takeaway for you is simple: the era of the paper check is ending. To prepare for the 2026 tax filing season and beyond, here’s what you should do:
- 1. Secure Your Direct Deposit: Verify the bank account information you use for your next tax return. This is the single most important action to ensure a smooth, on-time refund.
- 2. Prepare for Electronic Payments: If you’re not already, begin using electronic methods for all your business’s federal tax payments. This change for refunds signals that the shift for payments is also accelerating.
- 3. Stay Informed: The IRS has promised to publish additional guidance before the 2026 filing season. Keep an eye out for official updates from IRS.gov.
- 4. Consult Your Tax Advisor: Tax laws are constantly evolving, and a change like this can feel overwhelming. That’s why Tax Goddess advocates for proactive tax planning. We are here to help you thrive even when tax laws change, ensuring you remain compliant while maximizing tax savings.
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