IRS free tax filing program to be available nationwide starting in 2025

Personal finance

IRS Commissioner Danny Werfel testifies before the House Appropriations Committee in Washington, D.C., on May 7, 2024.
Kevin Dietsch | Getty Images

The IRS will expand Direct File, its free tax filing program, nationwide starting in 2025, the agency and the U.S. Department of the Treasury announced on Thursday.

“After a successful pilot, we are making Direct File permanent and inviting all 50 states to offer this free filing option to their residents,” U.S. Secretary of the Treasury Janet Yellen said in a statement. “The Treasury Department and IRS look forward to working with states to expand Direct File to Americans across the country.”

Direct File was available to limited taxpayers in 12 states during the 2024 filing season. More than 140,000 users successfully filed returns using Direct File and the pilot saved an estimated $5.6 million in tax preparation fees, the agencies announced in April. 

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“We are also exploring ways to make additional taxpayers eligible to use the system next year and beyond,” IRS Commissioner Danny Werfel told reporters Thursday on a press call. “Over the coming years, our goal is to gradually expand the scope of Direct File to support the most common situations, focusing in particular on tax situations that impact working families.” 

How the Direct File pilot worked

For 2024, the Direct File pilot included Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington and Wyoming.

The pilot focused on simple filings, including taxpayers with Form W-2 wages, Social Security retirement income, unemployment earnings and interest of $1,500 or less. However, this excluded taxpayers with contract income reported via Form 1099-NEC, gig economy workers and self-employed filers.

Plus, filers had to claim the standard deduction, which was $13,850 for single filers and $27,700 for married couples filing jointly for 2023.

Werfel said the agency will share more details about the expanded scope of Direct File for 2025, including which states respond to the invitation and join, later this year.   

Direct File is an ‘additional option’ for taxpayers

The news about the Direct File expansion comes roughly one week after the IRS announced plans to extend Free File, the agency’s partnership with a coalition of private tax software companies that allow many Americans to file federal taxes for free. 

Free File processed 2.9 million returns through May 11, a 7.3% increase compared to the previous year, according to the IRS.

“Direct File is an additional option to filing federal tax returns,” Werfel said on Thursday. “It is not meant to replace other important options by commercial providers who are critical partners with the IRS in delivering a successful tax system for the nation.”  

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