Paper tax refund checks are going away: Here’s how that affects your clients

The Internal Revenue Service announced it will phase out paper refund checks for individual taxpayers starting with the 2026 filing season, a change mandated by Executive Order 14247. Instead, most refunds will be delivered through direct deposit or other secure electronic methods. This move reflects a broader government effort to modernize payment systems, improve security and speed up tax administration.

Why this payment method switch is impactful

Paper checks are more than 16 times as likely to be lost, stolen, altered or delayed than electronic payments. Using direct deposit also avoids the possibility that a refund check could be returned to the IRS as undeliverable. According to the IRS, the transition is designed to protect taxpayers, accelerate refunds and reduce costs. By essentially eliminating the paper option, the IRS aims to reduce taxpayer vulnerability to mail theft and check fraud while ensuring funds arrive more reliable.

The shift also speeds up the refund process. If the return is filed electronically, electronic refunds can be issued in fewer than 21 days. By contrast, mailed checks may take six weeks or longer to arrive. For households that rely on their refund for essential expenses, this difference in timing can be critical.

Electronic payments are also more efficient for the government to process and cost less to administer. At a time when federal agencies are under pressure to reduce waste and modernize, the IRS views this transition as both fiscally responsible and taxpayer friendly.

Effects of payment changes on taxpayers

The tax return filing process remains the same for individuals. Taxpayers should continue to use their preferred filing method, whether electronic filing or through paper forms. The change affects only how refunds are issued, not how returns are submitted. Note the IRS recommends electronic filing to ensure receipt of the taxpayer’s return.

Most refunds will now be issued electronically with direct deposit being the fastest and most secure method. However, the IRS is also committed to supporting those without traditional bank accounts. Prepaid debit cards, digital wallets and limited exceptions to electronic delivery will be available for taxpayers who cannot access direct deposit. Exception eligibility may be based on access to banking, disability, hardship or other special circumstances, but specific criteria have not yet been released.

During the 2025 filing season, the IRS issued more than 93.5 million refunds to individual filers and nearly 87 million, about 93 %, were deposited directly into bank accounts. For the majority, this transition will feel seamless. For the smaller percentage who still rely on mailed checks, the change requires preparation and adjustment.

The IRS encourages taxpayers to act by verifying their banking information or opening a free or low-cost account. Other options such as FDIC’s GetBanked initiative and MyCreditUnion.gov, are highlighted by the agency as secure, affordable accounts.

Next steps for tax professionals

The IRS will issue detailed guidance before the 2026 filing season to explain refund delivery changes, alternative options and any limited exceptions that will apply. You can rely on NATP to pass this information along as well, as soon as it becomes available.

The bottom line is that the future of tax refunds is digital. For most taxpayers, this means faster refunds, stronger security and a more efficient process. For those who have relied on paper checks, the time to prepare is now. Whether by updating banking information, setting up a new account or exploring alternatives such as prepaid debit cards, taxpayers should act ahead of the next filing season to avoid refund delays.

Remaining questions about the electronic payment transition

One area of uncertainty is how the IRS will handle situations where a taxpayer’s banking information is missing, incorrect or a return error prevents an electronic deposit. In the past, the agency could issue a paper check to resolve the problem. With the new digital-first approach, it is unclear whether the IRS will retain that fallback option or create an alternative method to ensure taxpayers still receive their refunds without unnecessary delays.

Executive Order 14247 also eliminated the issue of paper checks for federal benefits. Those recipients can also receive their benefits by using a debit card issued by the federal DirectExpress® program. This could also be a solution for receiving federal tax refunds, but there has not been any mention of that just yet.

Until more guidance is issued, taxpayers should diligently review their account details, keep their banking information current and monitor the IRS updates as the filing season approaches.