On March 25, 2025, Executive Order 14247 [Modernizing Payments to and from America’s Bank Account] was signed into law. Effective for the 2026 tax filing season, the US Department of the treasury and Internal Revenue Service will have transitioned to fully electronic federal payments both to and from the IRS. A major problem is that paper checks are 16 times more likely to be lost, stolen, altered, or delayed. Hence, the purpose of Executive Order 14247 is to reduce financial fraud and improper payments, increase efficiency, reduce cost, and increase security. Direct deposit and other secure electronic options will improve speed, accuracy, and provide better protection for the public and government. In comparison to paper checks that can take up to 6 weeks or more, direct deposit remains the fastest option (less than 21 days).
During the 2025 Tax filing season, 93% of refunds were issued via direct deposit while 7% of individual files still received their refund check by mail. For those that do not have access to a bank account, alternative options include prepaid debit cards, digital wallets (ex: PayPal, Venmo, CashApp). There will be limited exceptions for those without bank accounts or in hardship situations. So how can an individual filer get prepared for electronic payments for the 2026 filing season? While the tax filing process remains the same, there are 3 things that can be done now to prepare. First, ensure that your direct deposit information is up to date when filing your tax return. Second, consider opening a low- or no-cost bank or credit union account. You will provide this information when filing your return. Third, monitor irs.gov for updates on alternative electronic payment options. You may also check there to see what the exception process is for those who cannot receive or pay via electronic funds. For more information specifically on modern payment options, please visit irs.gov/modernpayments.
Rreferences:
Friedlich, Mark, Modernizing payments: The shift from paper checks to digital, 1 May 2026
IRS Gov, IRS to phase out paper tax refund checks starting with individual taxpayers, 1 May 2026
IRS Gov, Questions and answers about Executive Order 14247: Modernizing Payments To and From America’s Bank Account, 1 May 2026
Wolters Kluwer, Best practices and technology solutions for transitioning to electronic payments, 1 May 2026
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