If you got your federal tax refund as a paper check last year, that’s almost certainly not going to happen again. Under Executive Order 14247, signed on March 25, 2025, the Treasury Department is required to stop issuing paper checks for most federal disbursements, including individual income tax refunds, by September 30, 2025. That means by the time the 2026 filing season opens in late January, filers who don’t already use direct deposit will need to provide bank account details or choose an approved electronic payment method before submitting their 2025 returns.
Approximately 14 million Americans still received paper refund checks during the 2023 filing season, according to IRS filing data. For those filers, the clock is ticking.
What the executive order actually requires
EO 14247 directs every federal agency to move payment recipients off paper checks and onto electronic funds transfer, “to the extent permitted by law.” That qualifier is important. It signals that legal exceptions may apply in certain cases, though neither Treasury nor the IRS has published a detailed list of exemptions as of June 2026.
A Treasury Department press release referenced the shift to electronic payments and the September 30, 2025, cutoff, though readers should verify the linked release directly for the most current details. The core requirements for taxpayers are to provide a bank routing number and account number on their return, or to elect to receive refunds on a government-approved prepaid debit card. Treasury noted that most filers already receive refunds electronically but acknowledged that millions still do not.
The IRS followed with its own newsroom release confirming that paper refund checks for individual taxpayers will be phased out starting with refunds processed after September 30, 2025. The agency said it would publish detailed instructions before the 2026 filing season covering how to enter or update direct deposit information, how to select an alternative electronic method, and what happens if a filer doesn’t provide usable account details.
Who this hits hardest
For the majority of filers who already use direct deposit, nothing changes. But for the roughly 5.6 million U.S. households that the FDIC classified as “unbanked” in its 2023 National Survey of Unbanked and Underbanked Households, the shift creates a real logistical problem. These households, disproportionately low-income, rural, Black, and Hispanic, don’t have a checking or savings account to receive an electronic deposit. Millions more are “underbanked,” meaning they have an account but rely on alternative financial services like check cashers and money orders for day-to-day transactions.
The change also reaches well beyond tax refunds. The executive order covers all federal disbursements, which means Social Security payments, Supplemental Security Income, veterans’ benefits, and other recurring federal payments are subject to the same electronic-first mandate. Retirees, people with disabilities, and families receiving federal assistance will all need electronic payment arrangements in place.
Treasury has pointed people without bank accounts toward several resources: the FDIC’s BankFind tool and GetBanked initiative, which help locate banks and credit unions offering low-cost accounts, and Direct Express prepaid debit cards, which already serve millions of federal benefit recipients. The IRS has also highlighted free tax preparation programs like Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE), where trained volunteers can help filers set up direct deposit during the filing process.
Unresolved questions heading into filing season
Several practical gaps remain. The biggest: what happens when an electronic payment fails? Direct deposits can bounce if a filer enters the wrong account number, if an account closes between filing and refund processing, or if a bank’s fraud filters reject the incoming transfer. The Treasury’s Bureau of the Fiscal Service has said it is developing standardized procedures for these situations, but as of June 2026, it has not publicly detailed whether a failed deposit will trigger a second electronic attempt, a temporary paper instrument, or some other fallback.
The “to the extent permitted by law” language also leaves open the possibility of hardship or accessibility exceptions. Some federal statutes still reference paper checks or impose specific notice requirements, and it remains unclear how those provisions will interact with the new electronic-first mandate. Consumer advocacy groups have pressed Treasury and the IRS to spell out whether any category of filer, such as elderly taxpayers without internet access, incarcerated individuals, or people experiencing homelessness, will qualify for continued paper refunds.
Those same advocates have raised concerns about the prepaid card options being promoted as alternatives. Some prepaid cards carry monthly maintenance fees, ATM withdrawal fees, or balance inquiry charges that can eat into a refund. The National Consumer Law Center has publicly urged the government to ensure that any recommended products are genuinely low-cost, carry strong error-resolution protections, and are covered by the same consumer safeguards as traditional bank accounts.
Outreach is another open question. Taxpayers who file on paper, who have limited English proficiency, or who lack reliable internet access are the least likely to hear about the change through digital channels. The IRS has committed to multilingual communications, but the specifics of that campaign, including its budget, timeline, and community partnerships, have not been made public.
It’s also worth noting that major tax preparation software providers, including TurboTax, H&R Block, and IRS Free File partners, will likely prompt users to enter direct deposit information during the filing process. But filers who prepare returns by hand on paper forms may not encounter any such prompt, making proactive outreach to that group especially critical.
What filers should do before the 2026 filing season opens
The most practical step for anyone who received a paper refund check last year is to open a bank or credit union account before the 2026 filing season begins. Many banks offer free checking accounts with no minimum balance, and credit unions frequently have even lower barriers to entry. The FDIC’s GetBanked page lists certified options.
Filers who already have an account but didn’t use direct deposit on their last return should gather their routing and account numbers now. That information is printed on personal checks and is also available through most banks’ online portals or mobile apps. When filing a 2025 return, entering those numbers in the direct deposit section of the form is all that’s required.
For people who prefer not to open a traditional bank account, the Direct Express prepaid debit card remains an option, though filers should review the card’s fee schedule before enrolling. The IRS is expected to publish a full list of approved electronic payment methods before the filing season opens.
One clarification that may save confusion: this mandate applies only to federal payments. State tax refunds are governed by individual state policies, and most states that issue paper refund checks have not announced similar phaseouts.
Whether this works depends on what happens next
The policy rationale is straightforward. Electronic payments are cheaper to process, faster to deliver, and harder to steal than paper checks. Treasury has estimated that each paper check costs the government significantly more to issue than an electronic transfer, and check fraud has been a persistent and growing problem.
But the gap between policy rationale and real-world execution is where millions of Americans could get caught. The next few months of guidance from Treasury and the IRS will determine whether filers who have operated outside the banking system, by choice or by circumstance, have a clear and genuinely accessible path to receiving the refunds they’re owed. As of June 2026, that path is still being paved.
