Compliance
How the New Paper-Check Phase-Out Impacts Your Tax Refund
Starting September 30, 2025, the IRS is phasing out paper tax refund checks for individuals—learn what this means for your refund delivery, digital payment setup, and exceptions for unbanked or underserved taxpayers.
By NomadicTax Research Team • 5-8 min read • November 21, 2025
## What’s Changing and Why
The IRS, as part of Executive Order 14247, has announced that **paper refund checks** for individual taxpayers will be **phased out beginning September 30, 2025**, transitioning to electronic payments wherever legally permitted. ([irs.gov](https://www.irs.gov/newsroom/irs-to-phase-out-paper-tax-refund-checks-starting-with-individual-taxpayers?utm_source=openai))
The change aims to:
- **Prevent loss, theft, or delays**: Paper checks are over sixteen times more likely to be compromised than electronic payments. ([irs.gov](https://www.irs.gov/newsroom/irs-to-phase-out-paper-tax-refund-checks-starting-with-individual-taxpayers?utm_source=openai))
- **Speed up refunds**: Electronic methods can deliver refunds in under 21 days, while mailed checks could take six weeks or more. ([irs.gov](https://www.irs.gov/newsroom/irs-to-phase-out-paper-tax-refund-checks-starting-with-individual-taxpayers?utm_source=openai))
- **Reduce government costs**: Processing electronic payments is faster and cheaper than issuing paper checks. ([irs.gov](https://www.irs.gov/newsroom/irs-to-phase-out-paper-tax-refund-checks-starting-with-individual-taxpayers?utm_source=openai))
## Who Is Affected
Almost all individual taxpayers who still receive refunds by paper check will need to switch to electronic receipt methods. Currently, **93% of individual refunds** are issued via direct deposit; only 7% still use mailed checks. ([irs.gov](https://www.irs.gov/newsroom/irs-to-phase-out-paper-tax-refund-checks-starting-with-individual-taxpayers?utm_source=openai))
Those most affected include people without bank accounts, seniors, or those in remote areas who may rely on physical mail. The IRS notes that limited exceptions will apply. ([irs.gov](https://www.irs.gov/newsroom/irs-to-phase-out-paper-tax-refund-checks-starting-with-individual-taxpayers?utm_source=openai))
## What You Should Do Now
To avoid refund delays, consider these steps:
- **Ensure your banking info is current.** Update direct deposit details via IRS channels or your payroll provider.
- **Explore alternative digital options.** If you don’t have a bank account, electronic wallets, prepaid debit cards, or other secure alternatives may be acceptable. ([irs.gov](https://www.irs.gov/newsroom/irs-to-phase-out-paper-tax-refund-checks-starting-with-individual-taxpayers?utm_source=openai))
- **Watch for guidance.** The IRS will issue detailed instructions before the 2026 filing season about how to handle refunds and exceptions. ([irs.gov](https://www.irs.gov/newsroom/irs-to-phase-out-paper-tax-refund-checks-starting-with-individual-taxpayers?utm_source=openai))
## Example Situation
Let’s say Carla still receives paper checks for her federal refunds. As of **October 2025**, since she lives in an area with limited bank access, she would need to arrange a **prepaid debit card or electronic wallet option** by the 2026 season—unless she qualifies for a specific exception. If she doesn’t, her refund execution may be delayed or she may need to take proactive steps to avoid complications.
## Actionable Takeaways
- Review your most recent tax return to see how you received your refund last time.
- If you’re using direct deposit, verify banking details (routing & account numbers).
- Set up a free bank account, card, or digital payment solution if needed.
- Stay tuned for IRS guidance for the 2026 tax filing season.
**Bottom line:** The paper-check phase-out pushes taxpayers toward faster, safer refunds—if you act now, your refund should arrive smoothly.