Making electronic tax payments with the modern IRS
The IRS is initiating a multi-year transition to electronic tax payments, with full implementation anticipated by 2027. This shift will require taxpayers to transition to digital tax payment methods. Here's an overview of the available options and what tax professionals should know to guide their clients through the switch to electronic tax payments.
Why electronic payments matter
Electronic payments offer numerous benefits for both taxpayers and the IRS:
- Payments are processed quickly through direct deposit
- Digital payments reduce the risk of check theft or loss.
- Payments can be made online or via mobile devices, anytime and anywhere
Top electronic payment options for taxpayers
What it is: A free service for individual taxpayers to pay directly from a checking or savings account.
How it works: No registration is required, and payments can be scheduled up to 365 days in advance. Confirmation is provided immediately upon payment submission.
Best for: Individual taxpayers paying balances due, estimated taxes or extension payments.
Electronic Federal Tax Payment System (EFTPS)
What it is: A free service individuals and businesses can use to pay federal taxes online or by phone.
How it works: For businesses, enrollment is required. For individuals, existing users can continue using EFTPS, but new enrollments ended after Oct. 17, 2025, as per Executive Order 14247. Once active, payments can be scheduled up to a year in advance.
Best for: Businesses and employers making federal tax deposits or taxpayers who already have an active EFTPS account.
Debit/credit card or digital wallet
What it is: Taxpayers can pay using a credit card, debit card or digital wallet (like PayPal).
How it works: Payments are processed through third-party providers; fees apply.
Best for: Taxpayers who prefer to pay via credit card or digital wallet.
Note: Employers cannot use credit/debit cards for federal tax deposits; EFTPS is required for that.
Electronic funds withdrawal (EFW)
What it is: Allows taxpayers to pay directly from their bank account when e-filing their tax return.
How it works: The payment is processed as part of the e-filing process, allowing taxpayers to select their withdrawal date.
Best for: Taxpayers who are e-filing their returns and wish to pay immediately or schedule a payment.
Online account for individuals
What it is: A secure portal where taxpayers can manage their tax accounts, make payments and view payment history.
How it works: Taxpayers can make payments, view notices and manage payment plans via their IRS Online account.
Best for: Taxpayers who want to keep track of their payments and manage their IRS accounts in one place.
What it is: Taxpayers can pay with cash at Taxpayer Assistance Centers (TACs) or retail partners, such as convenience stores. Refer to the IRS website for additional options.
How it works: There is generally a $1,000-per-day limit, and taxpayers must register online to use this option.
Best for: Taxpayers who prefer to pay in cash and need an in-person payment option.
What it is: The IRS's official mobile app available in English and Spanish.
How it works: Taxpayers can make payments using Direct Pay or a debit/credit card, check their refund status and access other IRS resources.
Best for: Taxpayers who prefer managing their tax account via mobile devices.
What it is: A method for urgent payments via wire transfer from a bank.
How it works: Bank fees may apply, and payments are made the same day.
Best for: Taxpayers needing to make an urgent payment.
Payment plans/Installment agreements
What it is: Taxpayers who cannot pay in full can apply for a short-term (up to 180 days) or long-term installment agreement.
How it works: Payment plans can be set up online for taxpayers with balances of $50,000 or less. Setup fees may apply.
Best for: Taxpayers who need to pay their taxes over time.
Final pointers on electronic tax payments
With the IRS moving toward mandatory electronic payments by 2027, now is the time for taxpayers to explore and update their payment options.
Verify bank details (name, account type, routing/account numbers), that the SSN/EIN matches the account, confirm who’s authorized to pay, and set up EFTPS (business) or Direct Pay/EFW (individuals). Keep a backup payment method and proof of each payment; paper checks still work today, but are phasing out.
As tax professionals, helping clients prepare for these changes will ensure smooth, timely and secure tax payments.
About the author(s)
NATP Staff