‘Starting with the 2025 filing season, the IRS will make Direct File a permanent option for filing federal tax returns,’ said IRS Commissioner Danny Werfel. The decision to make Direct File available nationwide and invite all states to participate in the program follows a successful pilot in 12 states during the 2024 filing season. Over 140,000 taxpayers in those states utilized the IRS’s free tax filing platform, with 90 percent of them ranking their experience with Direct File as “excellent” or “above average,” according to a survey conducted by the agency. The overwhelmingly positive response from taxpayers, as well as feedback from organizations and members of Congress, prompted the IRS to make Direct File a permanent option.
However, not everyone is in favor of the Direct File program. A group of 13 GOP Attorneys General expressed opposition, arguing that the IRS lacks the authority to roll out such a program and that it would harm low-income Americans and cost taxpayers millions of dollars unnecessarily. They also raised concerns about the conflict of interest when the IRS acts as a tax preparer, filer, and auditor. Despite this opposition, IRS Commissioner Danny Werfel defended the program, emphasizing that it is an optional tool and nobody would be forced to use it.
In a letter to Treasury Secretary Janet Yellen, Werfel highlighted data showing that 90 percent of pilot participants who responded to the survey rated their experience with Direct File as “above average” or higher. He also mentioned that 86 percent of respondents said it boosted their trust in the IRS. Based on these positive outcomes, Werfel recommended that Direct File be made a permanent option for filing federal tax returns nationwide. Treasury Secretary Yellen supported this recommendation, stating that Direct File will eliminate the average $270 cost of tax filing for working- and middle-class taxpayers.
The IRS is not only making Direct File a permanent option for federal tax returns but also exploring ways to expand its scope. The initial version of Direct File focuses on handling wage income and a limited number of tax credits, such as the child tax credit. However, the IRS aims to support most common tax situations, especially those impacting working families. A report to Congress in May 2023 indicated that taxpayers were interested in such a program, particularly if it included support for filing state tax returns. The feasibility of the Direct File system was analyzed by New America and Professor Ariel Kleiman, who recommended a gradual rollout and addressing key issues like customer support, data privacy, and security.
As part of the nationwide rollout, the IRS is inviting all states to partner with Direct File in the 2025 tax season. Additional announcements regarding new state partners and expanded eligibility are expected in the coming months. This move by the IRS aims to provide taxpayers with more than one no-cost option for filing electronically, ultimately strengthening the tax filing system and making the experience easier for taxpayers.
