Paper Refund Checks Are Disappearing — Here’s Your Action Plan

The IRS has announced that it will stop issuing paper tax refund checks to individual taxpayers, beginning September 30, 2025, as part of a broad shift to all-electronic payments. This change is driven by a March 2025 executive order requiring federal agencies to go paperless for payments and collections, including tax refunds. Below, we explore why this is happening, how it affects taxpayers (with a focus on dentist and physician clients of The Phillips Group), recent developments, and what steps to take in response.

Why Paper Checks Are Being Phased Out

The push to eliminate paper checks is rooted in concerns about fraud, cost, and efficiency. Paper-based payments are far more vulnerable to problems than electronic payments:

• Fraud and Theft: Check-related fraud has surged – the U.S. Treasury notes a 385% increase in check fraud since the start of the COVID-19 pandemic. Mailed refund checks can be stolen from mailboxes or altered, contributing to identity theft and refund fraud. Paper Treasury checks are 16 times more likely to be lost, stolen, or misdirected compared to electronic direct deposits.
• Delays: Paper refunds simply take longer. Taxpayers who e-file and use direct deposit typically get refunds in under 21 days, whereas waiting for a paper check in the mail can take 6 weeks or more. Mail delays and misrouting can further slow down access to your money.
• Cost and Inefficiency: Printing and processing checks is expensive and cumbersome. The federal government spends roughly 50¢ per paper check issued, versus under 15¢ for an electronic payment. Maintaining the infrastructure for paper payments (lockboxes, check clearing, record scanning) costs taxpayers over $657 million in FY 2024. Eliminating paper will cut costs and free up resources. It also reduces the environmental footprint of shipping millions of paper documents.

Timeline and Recent Developments

Executive Order (March 2025): In March 2025, an executive order titled “Modernizing Payments To and From America’s Bank Account” mandated all federal payments to go electronic by September 30, 2025. This order explicitly instructs the Treasury to cease issuing paper checks for all federal disbursements – including tax refunds, Social Security and Veterans benefits, vendor payments, etc. – by that date, except in limited circumstances. It also directs agencies to stop accepting paper checks for payments to the government (like tax bills), moving to all-electronic collections as soon as practicable.

IRS Announcement (September 2025): On September 23, 2025, the IRS confirmed it will begin implementing this policy for tax refunds. Paper refund checks for individual income taxpayers will be phased out starting September 30, 2025. This IRS news release marks the first step in the transition, focusing on individual filers. The IRS has stated it will issue detailed guidance before the 2026 tax filing season on how 2025 tax returns will be handled under the new rules. Until that guidance is released, taxpayers should continue filing and operating as normal – for example, those filing 2024 returns (including on extension through late 2025) can still follow the existing procedures and receive a check refund if that’s what they would normally do. The big changes will kick in for refunds issued after the cutoff date (likely affecting returns for tax year 2025 filed in 2026).

Phased Implementation: The IRS is starting with individual refunds, but the executive order’s scope is broader. Other federal disbursements (such as business tax refunds or government benefits) are on similar timelines. In practice, the Treasury and IRS might roll out changes in phases. If they haven't already, we can expect that business tax refunds and other payments will eventually switch to electronic-only. The IRS has noted this is the “first step” in a broader payments modernization, suggesting more rollouts will follow.

Reminder – Tax Payments to the IRS: Importantly, this change doesn’t just affect refunds. It also means the IRS (and other agencies) will no longer accept paper checks for payments you owe. After Sept. 30, 2025, if you try to pay a tax bill by mailing a check, the IRS will generally not accept it (barring specific exceptions). Taxpayers will need to send payments electronically, using options like IRS Direct Pay or the Electronic Federal Tax Payment System. In other words, paper is out on both sides – whether it’s money coming to you (refunds, benefits) or money you send in (taxes, fees).

Bottom Line: The September 30, 2025 deadline is a firm target for ending most paper checks, stemming from a high-level mandate. The IRS is actively preparing for this change, with more instructions to come. Taxpayers and tax professionals now have a clear heads-up that the era of IRS refund checks in the mail is ending, and now is the time to prepare for all-digital tax transactions.

How Tax Refunds Will Work Going Forward

The IRS will deliver refunds electronically once paper refund checks are phased out. The primary method will be direct deposit to a bank account, which is how most taxpayers receive their refunds today.

• Direct Deposit – The Default: Direct deposit will become the default (and essentially only) standard for tax refunds. About 93% of individual taxpayers already get their refunds via direct deposit. During the 2025 filing season, the IRS issued about 93.5 million refunds, and 93% (almost 87 million) were via direct deposit. Only about 7% (around 6–7 million taxpayers) received a paper check in the mail. Those 7% will need to transition to an electronic option for future refunds.
• Faster Access to Funds: Under the new system, taxpayers can expect faster refunds overall. Currently, if you file electronically and choose direct deposit, the IRS usually issues refunds in under 21 days. That speed will remain or improve. By contrast, filing a paper return and/or getting a check could take several weeks or months. Eliminating the paper step removes those extra weeks of waiting for the mail.
• Security and Peace of Mind: Electronic refunds also mean you won’t have to worry about a check getting lost or stolen. As noted, paper checks in the mail have a non-negligible risk of never reaching you. With direct deposit, the funds move straight into your account securely.
• What You Need to Do: For most people, no special action is required beyond continuing to do what you likely already do. When you file your tax return, provide your bank routing and account number in the refund section (or tell your tax preparer that info). If you haven’t, you’ll need to start using an electronic method.

Impact on Tax Payments (No More Mailed Checks to the IRS)

It’s worth emphasizing that this policy covers payments to the IRS as well as payments from the IRS.

• Electronic Payments Required: After Sept. 30, 2025, if you owe the IRS money, you generally must pay electronically. The IRS and Treasury will no longer accept paper checks or money orders in most cases.
• How to Pay Electronically: Options include:
  • Direct Debit (ACH) when e-filing.
  • IRS Direct Pay (free online).
  • Electronic Federal Tax Payment System (EFTPS).
  • Debit or Credit Card (with processing fees).
  • Digital Wallets (to be expanded).

Exceptions and Special Circumstances

Limited exceptions or waivers will be available:

• Unbanked individuals without access to electronic payment systems.
• Emergencies and hardship cases.
• Certain international taxpayers without U.S. bank accounts.
• Trusts and estates, until the IRS updates forms and processes.

Waivers will be rare, and the vast majority of taxpayers will need to comply with electronic methods.

Implications for Dentists, Physicians, and Other Professionals

For dentist and physician clients at The Phillips Group, this transition should be mostly seamless – but there are important considerations:

• Ensure Banking Info is Up-to-Date.
• Plan for Electronic Tax Payments. Estimated and year-end payments should be made through EFTPS or IRS Direct Pay.
• Expect Faster Refunds. If a refund is due, expect quicker access.
• Streamlined Finances. Electronic payments provide immediate confirmation.
• Address Security Concerns Proactively. Electronic systems are safer than mailing checks.
• Business Refunds. Corporations and partnerships expecting refunds should ensure bank account info is included on filings.
• For Retired Professionals. Social Security paper checks are also ending by the same date.

State Tax Refunds and Payments

The federal mandate applies only to federal payments. State tax refunds and payments are not directly affected.

• Most states still allow paper refund checks and paper check payments.
• Many states encourage direct deposit for refunds.
• Some states mandate electronic payments for large amounts (e.g., California requires it if payments exceed certain thresholds).

Most states will continue offering paper refunds, though they may follow the federal lead over time.

Next Steps 

The impending end of IRS paper checks is a major shift in tax administration. Still, it should be a positive one for most taxpayers.

Action Items:

1. Ensure the IRS has your correct banking information.
2. Open an account if unbanked, or arrange a prepaid card.
3. Familiarize yourself with IRS Direct Pay and EFTPS.
4. Stop mailing paper checks for federal tax payments.
5. Watch for IRS guidance ahead of the 2026 filing season.

For most taxpayers, this change means faster, safer, and more reliable tax transactions and a clear call to fully embrace electronic systems, now that paper refunds and payments will soon be a thing of the past.

At The Phillips Group, we work exclusively with healthcare professionals. If you are a dentist, physician, or optometrist and have questions about how these changes affect you—or if you are concerned that your current tax advisor may not be up to date on the latest IRS developments—please get in touch with us. We’ll ensure you are fully prepared for the all-digital future of tax refunds and payments.