Changes to IRS Tax Refund Process

For quite some time, the IRS has offered taxpayers the choice between receiving their refunds through paper checks or direct deposits. However, this practice is about to change.

Starting September 30, the IRS and the U.S. Treasury Department will begin phasing out paper refund checks.

“This is the first step in a broader transition to electronic payments,” an announcement from the IRS states.

They also noted that more detailed guidance regarding 2025 tax returns will be made available before the 2026 filing season begins. In the meantime, taxpayers are advised to continue using existing forms and procedures for filing their taxes.

The IRS claims these changes aim to safeguard taxpayers, speed up refunds, and cut costs. “Most individual taxpayers have already opted for direct deposit for their refunds,” the IRS mentioned. For the 2025 tax season, over 93 million tax refunds were processed, with 93% of those delivered by direct deposit.

Interestingly, only 7% of taxpayers still prefer paper checks for their returns.

The tax filing process itself isn’t changing. However, refunds will increasingly be sent via direct deposit or other secure electronic methods, potentially aiding those who lack bank accounts. For individuals without bank access, options such as prepaid debit cards and digital wallets may offer easier access to their funds.

What You Should Do

If you typically receive paper checks, it’s a good idea to prepare for the possibility of electronic refunds ahead of the 2025 tax season. The IRS suggests confirming your banking information or even considering setting up a free or low-cost bank account.