Federal Government to Phase Out Paper Checks by September 2025

An Executive Order was signed on March 25, 2025, mandating that the Federal government will cease issuing or receiving money via paper checks by September 30, 2025. This directive is part of a broader paper check phase out that is expected to impact various financial interactions, including tax refunds and payments, Social Security benefits, and payments to vendors with governmental contracts. The transition to electronic payments is intended to combat fraud, increase efficiency, reduce costs associated with paper check processing, and modernize the federal government’s operations.

For those who prefer not to receive direct deposits, the government will offer Treasury-approved alternatives such as prepaid debit cards. For tax payments, the Treasury urges taxpayers to utilize IRS Direct Pay or Electronic Federal Tax Payment System (EFTPS).

Exceptions to the Rule

The executive order does provide for certain exceptions where paper checks may still be used, including: Individuals without access to banking services or electronic payment systems,
Certain emergency payments where electronic disbursement would cause undue hardship,
National security or law enforcement-related activities where non-EFT transactions are necessary or desirable, and Other circumstances as determined by the Secretary of the Treasury.

Potential Penalties and Delays

While the Executive Order outlines the paper check phase out, it does not specify any penalties or delays for those who qualify for paper check exceptions. However, it remains to be seen if any measures will be introduced to discourage the use, both receipt and issuance, of paper checks. (Ed note: This method of payment can also be seen as a step towards the 'Cashless Society.' Will this lead to the Central Bank Digital Currency (CBDC)  (Read More)