The IRS has changed how many taxpayers receive tax refunds and make federal tax payments, with electronic methods becoming the main method.
The transition to electronic refunds and payments was triggered by Executive Order 14247, as part of a broader plan to update federal financial processes, reduce costs, and expedite processing times while also minimizing the risk of fraud, loss, theft, and undeliverability related to paper checks.
For the 2026 tax filing season, taxpayers should understand their options for receiving an IRS refund, making estimated tax payments, and paying a balance due. Here’s what you need to know about IRS electronic payments, direct deposit refunds, and the phaseout of paper checks.
Electronic Refunds
The IRS started phasing out paper checks on Sept. 30, 2025. Now, refunds are issued via direct deposit, prepaid card accounts, and other digital payment options.
- Direct deposit: This is the main method for individuals to receive their tax refunds. Remember that you’ll need to include your direct deposit information with your income tax filings.
- Prepaid card accounts and other digital payment options: In certain circumstances, taxpayers may have the option to receive refunds via these methods.
If you don’t provide banking information when you file your tax return, you may receive a notification about the missing information and explaining what steps to take if you expect a refund.
What happens if an individual doesn’t have a bank account? If direct deposit is not an option, other electronic payment options like prepaid card accounts will be used. While electronic payments are the main method, the IRS says it will “issue a limited number of paper checks in cases where no alternative is available.”
Electronic Payment Methods
The IRS started transitioning away from paper checks and money orders as payment on Sept. 30, 2025. It encourages taxpayers to submit payments electronically instead. This applies to all income tax payments, including estimates, extensions, and any balances due with your annual tax returns.
The good news is, the IRS is trying to provide as many electronic payment options as possible.
- IRS Direct Pay: You can securely submit payments online via the IRS site using your bank account information.
- Online account: Also known as an ID.me account, you need to set up a new account and verify your identity. It has the same payment functionality as Direct Pay, but unlike Direct Pay, it allows you to review prior and scheduled payments.
- Wire transfers: This method is primarily for large payments being submitted directly from an investment account, often with assistance from your investment advisor. Your financial institution may charge a wire transfer fee.
- Digital wallets and real-time payments: More modern technologies are expected to be used for federal transactions and could potentially be used for some types of refunds.
- Debit and credit card payments: The IRS has changed its rules, allowing taxpayers to pay directly via debit or credit card without using a third-party payment processor. Previously, the IRS was not allowed to charge a fee or charge for accepting tax payments via credit, debit, or charge card, but new rules allow it to do so. Being able to pay the IRS directly online or on the phone without needing to transfer to a third-party provider decreases taxpayer costs and makes the process more efficient.
- Pay with cash at a retailer: You can pay your taxes at certain retailers using cash. To do so, first choose payment processor (ACI Payments or Pay1040.com), enter your information on the processor’s website, and choose the cash payment option. You will receive a confirmation email and a second email with a payment barcode within five days. Find a retail partner and bring the barcode and cash for the payment. Save the receipt for your records.
For electronic payments, corporations and foundations must create an Electronic Federal Tax Payment System (EFTPS) account or use DirectPay. Trusts must also create an Electronic Federal Tax Payment System (EFTPS) account to submit secure payments online.
Keep in Touch With Your Tax Advisor
When you work with a Mowery & Schoenfeld tax advisor, we ensure you’re ready for any IRS changes and we’ll discuss any other tax planning matters well before the next tax season begins.
FAQs
Does the IRS still send paper refund checks in 2026?
No, the IRS in general does not send paper refund checks in 2026. Most payments happen electronically.
Do I need direct deposit to get my IRS refund?
For most taxpayers, yes. The IRS is moving away from paper refund checks, so refunds are generally being issued electronically through direct deposit or another secure electronic method. Exceptions are available in certain circumstances.
What happens if I don't have a bank account?
Taxpayers without a bank account can use an account that provides routing and account numbers, such as a prepaid debit card, payment app, or digital wallet. The IRS encourages taxpayers to find free or low-cost bank or credit union accounts.
This content is for general informational purposes only and does not constitute tax, legal, or professional advice. Readers should consult their tax advisor regarding their specific situation before making any tax-related decisions.