IRS Moves Toward All-Electronic Tax Refund System

If you’re used to getting a tax refund by paper check, it’s time to prepare for a major shift. The IRS announced it will phase out paper tax refund checks for individual taxpayers beginning September 30, 2025, moving most refunds to an electronic tax refund method instead.

For small business owners—especially those who file both business and personal returns—this change can affect cash flow timing and require a little planning before tax season.

Why the IRS is Moving to an Electronic Tax Refund

Paper checks are expensive to issue, slow to deliver, and more vulnerable to loss and theft. The IRS and Treasury have pointed to rising mail fraud and the administrative costs of paper payments as key reasons for the transition. This change is also driven by Executive Order 14247, which directs federal agencies to modernize payments and move away from paper checks where permitted by law.

What Stays the Same

The good news is you won’t need to change how you file your tax return. Your filing process remains the same—this update is about how the IRS issues refunds, not how you submit your return.

How to Get Your Electronic Tax Refund

The IRS will prioritize fast, secure electronic refund options. Here’s what  small business owners and taxpayers should know about their options:1) Direct Deposit (Best Option)
For most people, the fastest way to receive an electronic tax refund is direct deposit into a bank account. Ninety-three percent of taxpayers already use direct deposit, and this change will not affect them. When you file, simply enter your bank’s routing number and account number.

2) Prepaid Debit Cards or Digital Payment Options
If you don’t want to use a traditional bank account, some prepaid debit cards and certain mobile payment apps provide routing and account numbers that can accept an electronic tax refund. These options can work well for taxpayers who want speed without a typical bank setup.

3) Limited Exceptions: Paper Check Waivers
The IRS will still issue a paper check if you request a waiver because you lack access to banking services or electronic payment systems. Keep in mind that paper checks take at least six weeks to process, while electronic refunds typically take about 21 days.

What About Paying Taxes by Check?

For now, the IRS will still accept tax payments by check. However, electronic payment methods are generally faster and easier to track—especially helpful for small business owners managing quarterly estimates, payroll taxes, or balances due. To review all electronic payment methods, visit the IRS Make a payment web page.

Quick Checklist for Small Business Owner

To avoid delays and protect your cash flow:

• Confirm your refund method now (especially if you’ve received checks before)
• Use direct deposit when possible
• Verify routing/account numbers carefully to prevent processing delays
• Consider a prepaid card option if you don’t use a bank account
• Build extra time into your planning if you expect to request a waiver

Next Steps 

If you want help choosing the best electronic tax refund option—or aligning your refund timing with estimated payments and business cash flow—please contact TrueBlaze today.