On March 25, 2025, President Donald Trump signed a landmark executive order that will fundamentally change how the United States Treasury Department handles payments. Effective September 30, 2025, the Treasury will cease issuing paper checks for all federal disbursements and will require that payments to the federal government, including taxes, be made electronically, with limited exceptions. This sweeping modernization effort is designed to increase efficiency, reduce costs, and combat fraud, but it also carries significant implications for taxpayers across the country.
What the Executive Order Mandates
The executive order, titled “Modernizing Payments To and From America’s Bank Account,” directs the Secretary of the Treasury to stop issuing paper checks for all federal disbursements. This includes:
- Tax refunds
- Social Security and other benefit payments
- Vendor payments
- Intragovernmental transfers
Similarly, the order requires that all payments made to the federal government—such as taxes, fees, fines, and loan repayments—be processed electronically as soon as practicable and to the extent permitted by law. The order does not establish a central bank digital currency, but rather mandates the use of existing electronic payment methods, such as:
- Direct deposit to bank accounts
- Prepaid debit cards
- Digital wallets
- Real-time electronic transfers
Rationale Behind the Shift
The federal government’s reliance on paper-based payments has long been criticized for being costly, slow, and vulnerable to fraud. According to the White House, Treasury checks are 16 times more likely to be reported lost, stolen, undeliverable, or altered than electronic funds transfers. In 2024 alone, maintaining the infrastructure for paper check processing cost taxpayers over $657 million. Additionally, the rise in mail theft and check fraud since the COVID-19 pandemic has underscored the need for more secure payment methods.
By moving to digital payments, the government aims to:
- Defend against financial fraud and improper payments
- Increase operational efficiency
- Reduce administrative costs
- Enhance the security of federal payments
What This Means for Taxpayers
For Recipients of Federal Payments
Most Americans already receive federal payments, such as Social Security benefits and tax refunds, via direct deposit. However, hundreds of thousands still rely on paper checks each year. Under the new order, these individuals will need to transition to electronic payment methods by September 30, 2025. The Treasury Department, in coordination with other agencies, will launch a public awareness campaign to guide recipients through the process of setting up digital payment options.
For Those Making Payments to the Government
Taxpayers who pay federal taxes, fees, or fines by check will also need to switch to electronic payment methods. This includes individuals, businesses, and organizations that have traditionally mailed checks to the IRS or other federal agencies. The order accelerates the ongoing shift toward online tax filing and payment systems, making digital transactions the default for nearly all federal financial interactions.
Exceptions and Special Cases
Recognizing that not everyone has access to banking services or digital payment tools, the executive order allows for limited exceptions. The Secretary of the Treasury is authorized to grant exceptions for:
- Individuals without access to banking or electronic payment options
- Certain emergency payments
- Specific law enforcement or national security activities
- Other special cases as permitted by law
The Treasury will work with financial institutions, consumer groups, and other stakeholders to address the needs of unbanked and underbanked populations, ensuring that no one is left behind in the transition.
Data Security and Privacy
The order places a strong emphasis on protecting personal and financial information during the transition to digital payments. Agencies are required to implement robust security measures to safeguard classified information, personally identifiable information, and tax return data.
The March 25, 2025 executive order marks a significant step toward modernizing the federal government’s financial operations. For taxpayers, it means faster, more secure, and more efficient transactions with the government—but also a need to adapt to digital payment systems. While most Americans are already accustomed to electronic payments, those who are not will receive support and, in some cases, may qualify for exceptions. The transition is expected to save money, reduce fraud, and streamline the way Americans interact with their government.
The Executive Order is available here, and the White House fact sheet relating to the Executive Order is available here.
