The IRS Is Moving to All-Electronic Refunds — Here’s What That Actually Means for You

The federal government is officially stepping away from paper checks—and the IRS is already in motion.

An executive order issued in March 2025 requires federal agencies to move toward electronic payments wherever legally possible. As part of that shift, the IRS began phasing out paper refund checks for individual taxpayers starting September 30, 2025. This doesn’t change how you file your taxes—but it does change how you receive your money

What’s Changing (and What’s Not)

Let’s get one thing clear first: You will still file your tax return the same way you always have. What’s changing is how refunds are delivered.

Going forward, most IRS refunds will be paid electronically, primarily through direct deposit. If you don’t have a traditional bank account, the IRS will still offer digital alternatives like:

• Prepaid debit cards

• Digital wallets

• Certain mobile payment apps

Paper checks won’t disappear entirely—but they will become the exception, not the default.

Why the IRS Is Doing This

This move isn’t about convenience—it’s about security, speed, and cost.

Paper checks are:

• Over 16 times more likely to be lost, stolen, altered, or delayed

• Slower (often taking 6+ weeks to arrive)

• More expensive for the IRS to process

  
  

By comparison, direct deposit refunds typically arrive within 21 days and are far more secure. In fact, during 2025, 93% of refunds were already paid via direct deposit.

Only 7% were issued as paper checks—so for most people, this change won’t feel disruptive at all.

Are There Any Exceptions?

Yes—but they’re limited.

The IRS will still issue paper checks in specific situations, including:

• Taxpayers who receive a waiver because they lack access to banking or electronic payment systems

• Certain emergency or hardship cases

• National security or law-enforcement related situations

• Other rare circumstances approved by the Treasury

The IRS plans to set up:

• A dedicated phone extension to request a waiver

• An option inside your IRS online account to explain why you can’t provide banking information.

What You Should Do Now (This Is the Important Part)

If you want your refund without delays, the action step is simple:

Make sure the IRS has valid banking information on file when you file your return.

You can use direct deposit with:

• Checking or savings accounts

• Credit union accounts

• Brokerage or mutual fund accounts

• IRAs (Traditional, Roth, or SEP)

• Health Savings Accounts (HSAs)

• Coverdell education savings accounts

You can also split your refund across up to three accounts. Most tax software handles this automatically. If you’re filing on paper, you’ll need to attach Form 8888 to allocate the refund properly.

If you file electronically and don’t include banking details, the IRS will flag your return and request them. If you don’t respond, the refund will still be issued—but only after a six-week delay.

Don’t Have a Bank Account?

You still have options.

The IRS points taxpayers to:

• FDIC-approved banks that allow online account opening

• Credit unions through the NCUA locator tool

• The Veterans Benefits Banking Program for eligible veterans

Some mobile apps and prepaid debit cards also qualify, as long as they provide valid routing and account numbers. Just confirm with the provider before filing—the IRS plans to expand these options over time.

What About Paying the IRS?

Eventually, tax payments will also be required to be electronic, but for now, the IRS will still accept checks. That said, electronic payments are already faster, cleaner, and far less likely to cause processing issues.

If you care about avoiding penalties, delays, or unnecessary follow-ups, electronic payment is the smarter move.

The Bigger Takeaway

This shift is part of a larger pattern: The IRS is modernizing—and taxpayers who stay proactive will experience fewer problems.

To stay ahead:

• Use direct deposit whenever possible

• Make sure your banking information is accurate

• Don’t wait for IRS letters or delays to force action

• Treat your tax setup like a system, not a once-a-year task

Clean systems = faster refunds, fewer headaches, and better financial control.