IRS to Eliminate Paper Checks for Tax Refunds and Benefits: What You Need to Know

August 07, 2025 Slattery & Holman, P.C.

Individual tax form behind a US Treasury paper refund check

Starting September 30, 2025, the federal government will eliminate paper checks for most tax refunds and benefit payments. The IRS, U.S. Treasury Department, and Social Security Administration (SSA) are moving to an all-electronic payment system in an effort to reduce fraud, speed up transactions, and cut administrative costs.

This shift will affect millions of taxpayers, including those who are unbanked or living abroad. Now is the time to prepare.

Why Is the IRS Ending Paper Checks?

Many Americans still receive paper checks for IRS tax refunds, Social Security benefits, and other federal payments. Under an executive order signed by President Trump, this option will no longer be available after September 30, 2025.

According to the order, paper checks are 16 times more likely to be lost, stolen, or altered than direct deposit payments. Transitioning to electronic payments helps:

  • Prevent identity theft and check fraud
  • Speed up processing time
  • Save taxpayer dollars

What If You Don’t Have a Bank Account?

Roughly 6 million U.S. households remain “unbanked”, meaning they don’t have a checking or savings account. This creates a challenge for the transition.

To address this, the federal government may:

  • Issue tax refunds on prepaid debit cards
  • Encourage banks and credit unions to offer low-fee or no-fee accounts
  • Promote the Direct Express® card for federal benefit recipients

If you’re unbanked, it’s wise to open a U.S.-based account soon to avoid refund delays in the 2025 tax season.

3 Key Changes Taxpayers Should Expect

Here’s how this change may affect you:

  1. Bank account required: You must have a U.S. bank or credit union account to receive tax refunds and federal benefits.
  2. Faster refunds: Direct deposit eliminates mail delays, so you’ll likely receive your refund more quickly.
  3. Lower fraud risk: Electronic payments are more secure than paper checks.

Special Concerns for U.S. Citizens Abroad

If you live overseas, take note: foreign bank accounts generally won’t work for IRS direct deposit.

This presents a challenge for expatriates. The government may offer limited exceptions or partner with services that offer U.S.-based banking solutions. Expats should:

  • Consider opening a U.S. account now
  • Follow IRS updates on refund delivery options for non-residents

Estate and Trust Filings: An Overlooked Issue

The American Institute of CPAs (AICPA) has raised concerns for estate executors and trustees. Current IRS forms don’t allow for electronic refund details when dealing with estates or trusts, and mismatches in taxpayer names vs. account names can block refunds.

Professionals and fiduciaries should monitor guidance from the IRS and plan accordingly.

Social Security Payments

The SSA reports that less than 1% of beneficiaries still receive paper checks. If you’re one of them, you can:

  • Enroll in direct deposit using your bank or credit union
  • Sign up for the Direct Express® debit card to receive your benefits

Visit ssa.gov for instructions.

What Taxpayers Should Do Now

To avoid disruption, all taxpayers should:

  • Open a U.S.-based bank account (if you don’t have one)
  • Update your direct deposit info with the IRS or SSA
  • Watch for future guidance from the IRS
  • Contact your tax professional with questions

Questions About the IRS Refund Process?

At Slattery & Holman, we help clients stay ahead of tax law changes that impact refunds, benefits, and planning. If you’re unsure how the paper check phaseout will affect you or your loved ones, reach out to our team for guidance.

Contact us today to ensure you’re prepared before the 2025 deadline.

 

© 2025