IRS Direct File Program Launches in 2025: Free Online Tax Filing Now Available in 12 States

Diccon Hyatt is a seasoned financial and economic journalist who has extensively covered the economic landscape during the pandemic era. Over the past two years, he has authored numerous articles that simplify complex financial topics, focusing on how economic trends impact personal finances and markets. His experience includes work with U.S. 1, Community News Service, and the Middletown Transcript.

Key Highlights

• Following a successful pilot phase, the IRS Direct File program is now accessible to all eligible taxpayers in 12 participating states.
• This initiative allows taxpayers to file their federal tax returns online directly with the IRS for the first time ever.
• The IRS intends to expand the program nationwide and cover a broader range of tax situations based on insights from the pilot.

If you have yet to file your taxes, there's now a revolutionary way to submit your federal return online for free—directly through the IRS website.

The IRS Direct File program pilot officially opened to all qualified users on Tuesday, after an initial limited-access trial period. Currently, the program serves residents of 12 states and supports a select set of tax scenarios, excluding some income types like gig economy earnings. IRS officials have confirmed plans to broaden the program's scope in upcoming years.

This pilot marks a significant step toward modernizing the U.S. tax system, aligning it with other developed nations where taxpayers can file returns directly through government portals. Until now, online tax filing required using third-party services, often incurring substantial fees. For instance, TurboTax charges up to $209 for similar services this year.

Once fully implemented, the Direct File program is projected to save taxpayers billions annually. According to a recent Economic Security Project report, eliminating third-party fees and reducing filing time could save individuals approximately $11 billion per year—around $160 per taxpayer. Additionally, low-income families stand to claim an estimated $12 billion in currently unclaimed tax credits.

“Early users have saved hundreds of dollars and found the platform easy and straightforward,” stated Deputy Treasury Secretary Wally Adeyemo during a press briefing.

Tax preparation companies have expressed concerns over this new government-backed competition, noting that many taxpayers already have free filing options. For example, individuals earning under $79,000 who meet certain criteria can file for free via the IRS Free File program through third-party providers. Companies like TurboTax also offer free filing outside of this program, though with income and deduction limitations.

Approximately one-third of taxpayers in the 12 pilot states—about 19 million people—are eligible to use the IRS Direct File system. The platform is accessible on tablets, computers, and smartphones, with Spanish language support available since Tuesday afternoon.

The program was established under the Inflation Reduction Act of 2022, which allocated resources to enhance IRS enforcement and improve taxpayer services.

The IRS plans to leverage data from the pilot to expand Direct File in future tax seasons, covering more tax scenarios and extending availability to additional states.

Correction—March 12, 2024: The Direct File program officially launched on Tuesday, correcting an earlier misstatement about the launch day.

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