The End of Paper Checks: What the IRS’s Digital Shift Means for You
A significant shift is underway in how the federal government will deliver some tax refunds and benefit payments. Starting September 30, 2025, paper checks from the IRS, Social Security Administration (SSA) and other federal agencies will become a thing of the past. The move toward a fully electronic system aims to cut costs, minimize fraud and streamline payment delivery — but it will require action from some taxpayers.
Why the Change Is Happening
Historically, many Americans have received paper checks for their federal tax refunds and Social Security benefits. But in March, President Trump signed an executive order (EO) that will phase out paper payments entirely.
The EO outlines several reasons for this change. One of the most notable is the high fraud risk associated with physical checks. According to federal data, paper checks are significantly more vulnerable — up to 16 times more likely to be stolen, lost or altered — than direct electronic transfers.
Transition Challenges: Reaching the “Unbanked”
Not all Americans have access to traditional banking. Millions are considered “unbanked,” meaning they lack a checking or savings account due to accessibility issues, mistrust of banks or fees. This group will be among the most affected by the mandate.
To bridge this gap, the government may issue prepaid debit cards or encourage the use of low-cost banking services. Still, unbanked individuals are strongly encouraged to open bank accounts as soon as possible to avoid disruptions or delays when the change takes effect.
Important: If you requested an extension to file your 2024 return and still haven’t filed it before September 30, the new no-paper-check policy will be in effect when you file your 2024 federal return (due by October 15, 2025).
Practical Impacts for Taxpayers
Whether you’ve always received paper checks or simply prefer them for privacy or flexibility, here are three ways the new policy will affect you:
1. Direct deposit required. All federal payments, including tax refunds, will require a U.S.-based bank or credit union account. You’ll no longer have the option to receive paper checks by mail.
2. Faster refunds. With electronic transfers, taxpayers can expect to receive funds more quickly. The wait for mailed checks — including postal delays — is expected to be eliminated.
3. Improved security. The risk of mail theft or lost checks will disappear. Electronic systems offer more protection against fraud and identity theft.
Special Cases and Concerns
Most taxpayers will benefit from faster, safer payments. However, not every scenario fits neatly into this digital transformation. Here are examples of taxpayers that may experience challenges:
Taxpayers abroad. U.S. citizens living overseas may not have access to U.S.-based banks. Because the IRS doesn’t support direct deposit to most foreign accounts, expatriates may face unique challenges. The federal government is expected to address this issue in future guidance, possibly by offering alternative methods.
Estates and trusts. Executors handling final tax returns for deceased individuals may face complications. For example, a tax refund must be deposited into an account matching the taxpayer’s name — an issue when dealing with estate accounts. The American Institute of Certified Public Accountants has asked the U.S. Treasury Department to issue updated procedures and offer flexibility in these cases.
Privacy concerns. Some taxpayers are uncomfortable sharing their banking information with the IRS. While electronic payments are safer overall, public concerns about data privacy remain a barrier for some.
Social Security Beneficiaries
The SSA reports that nearly all recipients already use direct deposit. However, if you’re part of the small percentage still receiving paper checks, you’ll need to act soon. Beneficiaries can switch to direct deposit or opt for a Direct Express® prepaid debit card to continue receiving benefits without disruption.
What’s Next?
The federal government is expected to roll out further guidance and educational outreach in the coming weeks. These efforts aim to support taxpayers through the transition and address questions for those in complex situations.
The end of paper checks marks a turning point in federal payment processing. While the change brings clear benefits in speed and security, taxpayers need to plan ahead — especially those without bank accounts or living outside the country. Taking steps now can ensure you’re ready before the deadline of September 30, 2025. If you’re unsure how this change could affect your refund or benefit payments, it’s a good time to consult with your financial or tax advisor.
Copyright 2025
This article appeared in Walz Group’s August 18, 2025 issue of The Bottom Line e-newsletter, produced by TopLine Content Marketing. This content is for informational purposes only.
