On March 25, 2025, President Trump signed an executive order effectively eliminating the U.S. government’s long-standing practice of issuing paper checks.
The order, "Modernizing payments to and from America's bank account," requires all federal payments, including tax refunds, to transition to electronic methods by September 30, 2025. This significant change aims to eliminate inefficiencies, reduce costs, and enhance payment security.
The shift to digital will affect millions of taxpayers and has significant implications for the entire accounting industry, including Electronic Return Originators (EROs), tax professionals, and accounting firms. Understanding the executive order is essential for compliance and assisting clients.
Keep reading to learn more, including:
- Key provisions of the executive order
- What are the exceptions to the executive order
- What federal departments and programs issue the most paper checks
- What does this mean for professional tax preparers and accounting firms
Key provisions of the executive order
The executive order directs the elimination of most paper-based federal payments in favor of electronic payment methods, reducing costs, fraud risks, and delays while eliminating inefficiencies and enhancing payment security.
As part of the executive order – and to ease the transition – the Treasury Department will launch a comprehensive nationwide campaign to educate payment recipients on the transition and provide guidance for setting up electronic payment options.
Electronic payment is mandatory, with few exceptions
All federal disbursements, including tax refunds, Social Security payments, vendor payments, and benefits, must be issued electronically by September 30, 2025.
Payments made to the federal government, including taxes, fines, fees, and loans, must also be made electronically by September 30, 2025 (where permissible under existing law).
Accepted electronic methods include direct deposits, debit and credit cards, digital wallets, and real-time payment systems.
Paper check exceptions
Despite the need for modernization and improved security, there will be extenuating circumstances and the need for exceptions, and the executive order acknowledges that, directing the Treasury Secretary to make exceptions for:
- Individuals who lack access to banking services or electronic payment systems.
- Emergency payments where electronic methods are impractical.
- Certain national security or law enforcement activities that necessitate non-electronic payments.
- Other special cases that may qualify for an exception under other existing laws.
Treasury-approved alternatives like prepaid debit cards will also be made available.
Advantages of electronic payment: Improved payment security and cost savings
Operational cost savings are one of the executive order's key goals. The order states that the government spent over $657 million in FY 2024 to maintain the infrastructure for paper-based payments.
According to a White House fact sheet about the executive order, “Treasury checks are 16 times more likely [than electronic payments] to be reported lost or stolen, returned undeliverable, or altered.” A 2024 study from FinCEN on mail-related check fraud found that about $688 million in financial losses were reported over six months (March-August 2023).
Breaking it down: Where does the federal government still issue paper checks
The executive order affects millions of Americans across various federal programs, making the following statistics particularly meaningful.
Tax refunds
For the 2025 tax season, as of May 3, 2025, the IRS issued 91.96 million refunds, with roughly 6.4% (or 5.9 million) issued via paper checks or other non-electronic methods. The number of paper checks or prepaid debit cards issued during the filing season increased by 30%, while the number of direct deposits decreased by 3% (compared to the 2023 Filing Season), according to the Final Results of the 2024 Filing Season report by the by the Treasury Inspector General For Tax Administration (TIGTA). The report, issued on April 24, 2025, also reports that the number of paper-filed tax returns filed during the same period decreased by 11%.
These numbers highlight the continuing significant, reliance on paper checks and other non-electronic vehicles for tax refunds.
Social security payments
While most Social Security beneficiaries have transitioned to direct deposit or a government-issued debit card, according to the latest estimates, 0.7% of the almost 68.8 million Social Security payments sent out monthly are paper checks (SSA.Gov May 2025 Tables). That translates to a little over 485,000 retirement, disability, and Supplemental Security Income benefits issued as a paper check and mailed to the recipient.
The unbanked population
One digital payment mandate exception in the executive order is for the unbanked population (individuals without access to banking services).
Today, 4.2% of U.S. households (approximately 5.6 million people) remain unbanked, with unbanked and underbanked rates disproportionately higher among minority households:
- 2% of American Indian/Alaska Native households.
- 6% of Black households.
- 5% of Hispanic households.
- 9% of White households.
Most commonly, individuals are without access to banking services due to an inability to meet minimum balance requirements, according to an FDIC study from 2022. These individuals are the most likely to face challenges as paper checks are fully phased out, and may look to their tax professional for support during tax time.
Implications for tax professionals
The shift to electronic payments represents a significant change for tax professionals, particularly EROs, who are critical in facilitating tax refunds.
While most tax refunds are already issued via direct deposit, eliminating paper checks will require modified client intake processes, technology systems, and client education adjustments. It’s up to the accounting firm, tax office, or ERO to determine how best to support clients and
The executive order presents both challenges and opportunities for tax professionals to enhance their services and differentiate themselves in the market.
