(Photo by Tasos Katopodis/Getty Images for Economic Security Project)
The IRS’s free tax-filing system, Direct File, is doubling its reach to 24 states for next year.
The program will also cover additional tax situations, potentially enabling more US residents to access the IRS’s alternative to competing tax software. According to the IRS's announcement, as many as 30 million taxpayers will be eligible for the Direct File program.
"During the pilot last year, Direct File was available in Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington State, and Wyoming," the IRS says. "For the 2025 tax filing season, Direct File will also be available in Alaska, Connecticut, Idaho, Kansas, Maine, Maryland, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania, and Wisconsin.”
It’s possible more states could join Direct File in 2025. In addition, “several states have expressed interest or announced that they will participate in Direct File in 2026,” the IRS added.
For next year’s tax season, the Direct File program will also cover taxpayers who earn interest of more than $1,500, have earned income during their retirement, or are Alaska residents who need to report income from the Alaska Permanent Fund dividend.
Other situations will be included as well, such as taxpayers claiming the Child and Dependent Care Credit, Premium Tax Credit, Credit for the Elderly and Disabled, and Retirement Savings Contribution Credits.
“Over the coming years, the IRS will gradually expand Direct File’s scope to support most common tax situations, focusing —in particular— on tax situations that impact working families,” the IRS added.
For this past tax season, the Direct File program focused on simple tax situations. Still, over 140,000 filers ended up using the program, exceeding the agency’s goal of 100,000. Importantly, 90% of the users rated their experience as “Excellent” or “Above Average.” Direct File users also claimed more than $90 million in refunds while saving an estimated $5.6 million in tax-preparation fees on their federal returns, according to the US Treasury Department.
Hence, next year’s tax filing season is poised to truly test the Direct File program. The free tax filing system operates as a web-based service accessible on phones and PCs. Available in English and Spanish, Direct File also includes a live chat function to help users through the tax filing process.
The IRS expects the demand to be high, noting that “millions of taxpayers who did not live in one of the 12 pilot states visited the Direct File website to learn more about the service.” But on the downside, Direct File doesn’t support state taxes and will direct you to a state-supported tax-preparation service.