Trump Executive Order Ends Paper Checks for Federal Payments

On March 25, 2025, President Donald Trump issued an executive order focused on modernizing payments to and from the Federal Government. Aimed primarily at eliminating the use of paper-based payments, including checks and money orders, the order was intended to prevent fraud and improper payments, increase efficiency, and reduce the cost and infrastructure needed to continue processing paper checks.

Federal Payments Are Going Digital in 2025: Key Highlights

The order specifies that effective Sept. 30, 2025, the Treasury and IRS shall cease issuing paper checks for all federal disbursements. This includes tax refunds. Additionally, all payments made to the Federal Government should be processed electronically. It mandates that all executive departments and agencies shall transition to EFT methods, including direct deposit, prepaid card accounts, and other digital payments options.

Limited Exceptions to the No-Paper-Checks Rule

Some very limited exceptions provide for alternate payment options, including:

• Individuals that do not have access to banking services or electronic payment systems
• Certain payments where electronic disbursement would cause undue hardship
• National security or law enforcement related activities where non-EFT transactions are necessary or desirable
• Other circumstances as determined by the Secretary of the Treasury as reflected in regulations or other guidance

As a part of this transition, the Secretary of the Treasury has been mandated to develop and implement a public awareness campaign and provide guidance on access and setting up digital payment options as well as provide adequate support to affected individuals and entities.

Unanswered Questions from Treasury and IRS Guidance Needed

There are many open questions that Treasury needs to answer, including (but not limited to):

• What happens if someone pays with a paper check? Will it just be returned?
• What if someone is getting a refund but there’s no banking information included on their tax return? How will that refund be paid?
• How does this apply to expatriates living outside the U.S.? The IRS only allows direct deposits at U.S. banks. Will there be an exception?
• How are exceptions going to be handled? What are the payment options?

While Treasury could delay the implementation of this mandate, there has been no evidence or discussion from Treasury to support that a delay is imminent.

Planning Ahead for the 2025 Federal Payment Changes

It is critical that individuals and entities impacted by this change start planning now. For assistance, please reach out to your KSM advisor or fill out the form below.