The Next Step in Tax Modernization: Federal Payments Go Digital

The tax world has been steadily moving toward modernization for years. E-filing is now second nature, digital signatures have replaced stacks of paperwork, and online accounts give taxpayers instant access to their records. Now, the federal government is taking the next big step—payments to and from the government are going digital.

Executive Order

In March 2025, President Trump signed an Executive Order called “Modernizing Payments to and From America’s Bank Account.” Starting September 30, 2025, paper checks will be phased out for almost all federal payments. That means tax refunds, Social Security benefits, and vendor payments will all move to direct deposit, prepaid debit cards, or even digital wallets. On the other side, businesses and individuals paying taxes, fees, and fines will also shift away from paper checks and toward secure electronic systems. The goal is speed, security, and efficiency—but more importantly, it’s part of a broader effort to modernize how Americans interact with the tax system.

This change isn’t happening in isolation. States are already moving quickly in the same direction. Many state tax departments have long required businesses to file and pay electronically, and more are adopting real-time payment systems that clear funds in hours instead of days. State-issued refunds by paper check are becoming rare, and before long, electronic delivery will likely be the only option.

So, what does this mean for taxpayers?

It starts with making sure you’re ready to interact with the IRS online. The IRS now requires identity verification through https://ID.me to set up or access your online account. The process takes a little time the first time you do it—you’ll need to provide documents and sometimes a quick selfie check—but once you’re in, you can manage nearly everything in one place. You can view your balance, make payments, check notices and refund status, download transcripts, and get copies of informational forms issued in your name (1099s for interest, mortgage payments, etc). For many people, this will become the primary way to interact with the IRS as more services move online.

Businesses should also be thinking ahead. Updating accounts payable and receivable processes to handle electronic payments exclusively will be key. With real-time payments on the horizon, cash flow could improve as deposits arrive instantly instead of waiting for a check to clear. Payroll providers and internal accounting teams should all be preparing for this shift to avoid last-minute surprises.

This Executive Order is really just the next chapter in a much larger story. Just as we’ve embraced e-filing, electronic signatures, and online taxpayer accounts, we now need to prepare for a fully digital payment environment. For individuals, it’s about making sure your IRS and state accounts are set up and your banking information is current. For businesses, it’s about streamlining your systems and embracing the efficiencies that come with going fully electronic.

The future of tax isn’t just electronic filing—it’s electronic everything.