IRS Ends Free 'Direct File' Program

Direct File allowed eligible taxpayers to file tax returns directly with the IRS for free. It began in 12 states, then expanded to 25 for tax year 2024, when it also covered more tax situations than the pilot program did. The IRS also operates Free File, which provides access to free software tools offered by IRS partners and is available to taxpayers with an adjusted gross income of $84,000 or less.

Under the Direct File pilot program, 140,803 returns had been filed by users and accepted by the IRS. As of April 20, 296,531 returns had been filed by users and accepted by the IRS, according to a Treasury report to Congress last month.

For tax year 2024, returns submitted using Direct File made up less than 0.5% of the approximately 146 million returns filed, the report said. Direct File cost at least $41 million in tax year 2024, the report said, adding that the figure understates “the true costs of developing, administering, and supporting” the program that year.

The report recommends that the IRS focus on strengthening existing free filing programs, particularly Free File.