The U.S. Department of the Treasury and the IRS have announced that the number of states offering Direct File will double in Filing Season 2025 to 24. In addition to expanding the number of participating states, Direct File will now cover additional types of income, credits, and deductions, making it available to an estimated 30 million taxpayers in the upcoming filing season. Direct File is driven by the Inflation Reduction Act (IRA), which tasked the IRS with developing a free direct e-file tax return system.
A pilot program in 2024 allowed eligible taxpayers in 12 states to file their federal tax returns for free directly with the IRS using Direct File. The pilot was considered a success, with 140,803 taxpayers using the service. In May 2024, U.S. Secretary of the Treasury Janet L. Yellen and IRS Commissioner Danny Werfel announced that the program would be permanent and available to all 50 states and the District of Columbia for the 2025 filing season, with plans to expand support for all common tax situations over the next few years.
Direct File provides a free and secure option for taxpayers with simple tax situations in participating states. Taxpayer eligibility was previously limited to those with certain types of income, credits, and deductions, but for Filing Season 2025, additional income types and credits will be supported. Bilingual support will continue to be available through live chat, with enhanced features to provide guidance and assistance for taxpayers in English and Spanish.
During the pilot program, four states developed companion state tax filing tools for Direct File users to file their state returns. Code for America has announced new partnerships with Maryland, North Carolina, New Jersey, and Idaho to provide integrated state tax filing tools for Direct File taxpayers, with existing collaborations in Arizona and New York. These partnerships aim to make filing state taxes free and easy for more Americans and streamline the tax filing process.
The IRS reports that the average American spends $270 and 13 hours filing their taxes. With Direct File, eligible Americans can file their taxes online for free, potentially saving hundreds of dollars. Secretary of the Treasury Janet L. Yellen emphasized the potential cost savings and convenience of Direct File, highlighting the Biden-Harris Administration’s goal of reducing costs for American families. The program is expected to save taxpayers tens of millions of dollars in filing fees in the upcoming filing season.
Looking ahead, Treasury and the IRS have secured commitments from additional states to join Direct File in Filing Season 2026. The continued expansion of the program aims to make filing taxes easier, more accessible, and more affordable for millions of Americans. With the success of the pilot program and the support of various states and organizations, Direct File is poised to revolutionize and democratize access to the tax system in the years to come.
