Mandatory Electronic IRS Payments: What You Need to Know

The Internal Revenue Service (IRS) is moving forward with a major modernization effort to reduce its reliance on paper transactions. As part of this initiative—and in response to Executive Order 14247, “Modernizing Payments to and From America’s Bank Account”—the IRS will phase out most paper refund checks and transition taxpayers to electronic payment and refund methods.

For the 2025 tax year and beyond, the IRS will begin requiring that refunds be issued electronically whenever possible. Taxpayers will also be encouraged, and eventually required, to make their tax payments electronically rather than by paper check. These updates are designed to provide faster processing, enhanced security, and greater convenience for both individual and business taxpayers.

Paying Taxes Electronically

Along with receiving funds electronically, taxpayers can make their IRS payments through several secure digital options.

• IRS Direct Pay: Direct Pay allows individuals to pay directly from a checking or savings account with no fees. Payments can be made in full or scheduled in advance, and taxpayers receive immediate confirmation.
• Debit Card, Credit Card, or Digital Wallet: Taxpayers may use a debit or credit card, or a digital wallet such as PayPal or Venmo, through IRS-approved processors. Processing fees may apply depending on the payment method.
• IRS Online Account: Taxpayers who set up an IRS Online Account can make payments, view balances, and manage payment history all in one place.
• Electronic Federal Tax Payment System (EFTPS): EFTPS is a free, secure service for individuals and businesses to pay taxes electronically. Enrollment is required, and payments can be scheduled in advance.
• Electronic Funds Withdrawal (EFW): When filing a tax return electronically through tax software or a professional preparer, taxpayers may choose to have the payment automatically withdrawn from their bank account.

These payment options help ensure payments are received promptly, reducing the risk of delays or lost checks.

Receiving Electronic Refunds

Electronic refunds are the quickest and most secure way to receive tax payments from the IRS. Here are the primary options available:

• Direct Deposit to a Bank Account: Taxpayers can have refunds deposited directly into a checking, savings, or retirement account by including the account and routing numbers on their tax return. This method is the fastest and safest way to access funds.
• Deposit to a Prepaid Debit Card: If a taxpayer uses a reloadable prepaid debit card that accepts direct deposits, the IRS can send the refund directly to that card. Taxpayers should confirm that the card issuer provides a valid routing and account number.
• Deposit to a Mobile App: Some financial apps and digital banking platforms offer routing and account numbers that can be used for IRS deposits. Taxpayers should verify these details with their app provider before filing.
• Splitting Refunds: The IRS allows taxpayers to split a refund across up to three accounts—for example, depositing a portion into a checking account and the rest into savings or an IRA. This can be done using Form 8888, Allocation of Refund (Including Savings Bond Purchases).

If a 2025 tax return does not include direct deposit information, the IRS will send a notice requesting updated banking details. If no information is provided within 30 days, a paper check will be issued after approximately six weeks. While paper checks will still be available in limited cases, this process will take longer and could delay refund access.

Preparing for the Transition

As the IRS shifts toward electronic transactions, taxpayers are encouraged to:

• Verify that their bank account information is current and correct before filing their 2025 tax return.
• Provide direct deposit details when submitting their return to avoid refund delays.
• Familiarize themselves with the various electronic payment options to determine which is most convenient and cost-effective.
• Share this information with family members or others who may typically rely on paper checks for tax payments or refunds.

While electronic transactions will soon become the standard, the IRS is also expected to outline limited exceptions for taxpayers who are unbanked, live abroad, or have other circumstances that make electronic payments impractical.

Moving Forward

The IRS’s move toward a fully electronic payment system marks a major modernization in how taxpayers interact with the agency. By preparing now—updating banking details, understanding available options, and opting for direct deposit—taxpayers can ensure a smooth transition and enjoy faster, more secure transactions.

For additional details about the IRS’s electronic payment and refund options, visit irs.gov/payments