UPDATE: What the Shift to Electronic Tax Payments Means for Taxpayers

Electronic Tax Payment

On September 23, 2025, the IRS issued News Release IR-2025-94, providing its first guidance on implementing Executive Order 14247. This Executive Order directs the U.S. Treasury to phase out paper checks for federal payments and to move toward electronic processing of all payments made to the government.
While the long-term goal is clear, the IRS’s initial announcement makes it clear that the phase out will begin in limited stages. The IRS has committed to issuing comprehensive instructions for 2025 tax returns before the 2026 filing season. Until then, taxpayers, including those filing 2024 returns on extension with deadlines before December 31, 2025, should continue to use current forms and procedures.


Key Takeaways From IR-2025-94
• Individual Refunds: Paper check refunds for individual taxpayers will begin to be phased out for 2025 tax returns. Refunds will be directed to bank accounts whenever possible.
• Encouragement to Open Bank Accounts: Taxpayers without bank accounts are encouraged to open free or low-cost accounts to receive direct deposits.
• Alternative Refund Options: For individuals unable to provide banking information, the IRS anticipates offering prepaid debit cards, digital wallets, or other alternatives. Specific details on how these will be distributed and managed are not yet available.
• Payments to the IRS: Although the Executive Order requires that tax payments eventually be made electronically “as soon as practicable,” the IRS has not yet imposed new restrictions on how taxpayers submit payments. For now, taxpayers may continue to use existing payment options, including paper checks, until additional guidance is issued.


What Remains Unclear
Several important questions are still unanswered:
• How will prepaid debit cards or digital wallets be distributed and safeguarded?
• Will there be exceptions for certain groups, such as the unbanked or small businesses?
• How will trusts, estates, and entity tax refunds be handled?
• When will electronic payment requirements formally extend to tax deposits and business tax payments?


Looking Ahead
The September 30, 2025 date marks the start of the federal government’s transition away from paper checks, beginning with individual refunds. Other categories of refunds and all tax payments remain unchanged until the IRS issues further guidance. What is clear, however, is that the requirement is coming, and taxpayers should begin preparing now. Taking steps such as ensuring you have a bank account that can accept direct deposits, considering digital wallet or prepaid debit options if banking access is limited, and staying alert for IRS updates ahead of the 2026 filing season will help make the transition smoother. Our team will continue monitoring developments and sharing updates to help you navigate this change with confidence.