Starting after September 30, 2025, the IRS will process all tax payments and refunds electronically – paper checks will be a thing of the past, except for those who truly don’t have access to electronic banking. This change affects everyone: individuals, businesses, estates and trusts.
Individual Refunds Transitioning First
The IRS, on Tuesday September 23,2025, shared that it would start by phasing out of tax refunds by check for individual taxpayers at the end of September. The agency refers to the phase-out as “the first step of a broader transition to electronic payments.”
Under the executive order, Treasury may provide “limited exceptions” to the electronic payment requirements, including for individuals without access to banking services and “where electronic disbursement would cause undue hardship.”
Tuesday’s notice confirms that “limited exceptions will be available” to the paperless refund policy. But the IRS encourages taxpayers who are unbanked to consider opening a free or low-cost account. Alternatively, these taxpayers may obtain their refunds via a prepaid debit card or digital wallet, says the agency. (See here for current IRS guidance on ways to get a refund.)
Notably, the executive order takes a more measured approach for payments made to the federal government, calling for a transition to electronic payments “as soon as practicable.” Accordingly, IR 2025-94 instructs taxpayers to “continue to use existing payment options until further notice,” while promising additional guidance “prior to the 2026 filing season.”
Shifting to electronic payment systems provides several advantages over traditional paper-based methods. E-payments help reduce processing times and minimize errors. They also lower administrative costs and enhance payment security.
What is the Impact?
IRS refunds will be issued electronically via direct deposit into U.S. banks, IRS debit cards and prepaid debit cards after September 30, 2025.
The executive order also requires that payments to the IRS including estimated taxes and balances due must be processed through approved e-payment platforms. However, unlike refunds, the government has stated that electronic payments should be made as soon as practicable.
Payment options for individuals:
- IRS Direct Pay – a free, secure online service that allows individuals and businesses to make tax payments directly from their bank account
- Electronic Funds Tax Payment System (EFTPS) – a free system offered by the US Department of the Treasury to pay your federal taxes
- IRS Online Account – is a secure portal on the IRS website that allows individuals to access and manage their tax information and make payments
- Digital wallets
- Credit cards
- Wire transfers
Payment options for businesses, trusts and estates:
- EFTPS
- Wire transfers
- IRS Direct Pay