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If you're expecting a tax refund, there's a new rule you should know about before filing. A 2025 executive order is pushing federal agencies — including the IRS — to move away from paper checks and toward electronic payments.
Taxpayers who don't update their payment preferences could see slower processing times as the transition unfolds. Taking a few minutes to adjust your refund settings now can help you eliminate some money stress later.
Here's what's changing and what it means for your refund.
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The IRS will begin phasing out paper tax refund checks in 2026
The U.S. Department of the Treasury, in coordination with the IRS and other agencies, is moving federal payments to electronic methods under Executive Order 14247, which was signed on March 25, 2025. The change applies to tax refunds, federal benefit payments, vendor payments, grants, and even certain payments made to the government, such as tax balances and fees.
While some limited exceptions will remain available, digital payments are becoming the default option for most taxpayers. In practical terms, direct deposit is replacing paper refund checks as the standard method of delivery.
Executive Order 14247 explained
Executive Order 14247, titled "Modernizing Payments To and From America's Bank Account," was signed on March 25, 2025. Section 3 directs the Secretary of the Treasury to cease issuing paper checks for federal disbursements, including tax refunds, effective September 30, 2025, to the extent permitted by law.
Section 4 outlines exceptions for individuals without access to banking services, certain emergency payments, national security situations, or other circumstances determined by the Treasury. Taxpayers who qualify for an exception will be offered alternative payment options, but most filers should expect electronic delivery to become the norm.
What taxpayers should do to avoid refund delays
The IRS encourages taxpayers to provide accurate bank account or prepaid debit card information when filing in order to receive refunds electronically.
The agency also recommends using approved electronic payment systems, such as IRS Direct Pay or the Electronic Federal Tax Payment System (EFTPS), when paying taxes owed. Reviewing your banking details before filing — and confirming that your account remains open and active — can help prevent rejected deposits and processing delays.
If you do not have a traditional bank account, the IRS provides information on prepaid debit cards and other electronic options through IRS.gov. Updating your payment preferences now reduces the likelihood that your refund will be delayed during the broader shift away from paper checks.
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Transitioning to direct deposit from paper checks
Moving to electronic refunds can shorten delivery times and reduce the risk of lost or stolen checks. Direct deposit also lowers administrative costs for the federal government and speeds up processing across agencies.
For taxpayers, electronic refunds may arrive faster than mailed checks, especially during peak filing season.
Smart ways to use your tax refund
A tax refund can be an opportunity to strengthen your overall financial plan rather than fund short-term spending.
Consider paying down high-interest debt first, especially credit cards, where interest charges can quickly outweigh investment gains. Building or replenishing an emergency fund is another practical move, particularly if rising costs have strained your savings.
You could also contribute extra money to your IRA for tax year 2025 (if you didn't already max it out) before the tax filing deadline to boost long-term growth and make the most of tax-advantaged space.
Bottom line
The federal government is accelerating its transition away from paper checks and toward electronic payments, including tax refunds. Executive Order 14247 sets the framework for that shift, with limited exceptions for hardship or special circumstances.
Taxpayers who update their direct deposit information and confirm their banking details are more likely to receive refunds quickly and securely. Electronic payments can reduce mailing delays, limit fraud exposure, and lower your financial stress during tax season.
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