Taxpayers in 24 states can file their 2025 tax returns directly with the IRS

WASHINGTON — The IRS is expanding its program that allows people to file their taxes directly with the agency for free.

The Federal Tax Collector’s Direct File program, which allows taxpayers to calculate and submit their tax returns directly to the government without using commercial tax preparation software, will be open to more than 30 million people in 24 states during the 2025 tax filing season.

The program was piloted in 12 states during the 2024 tax season.

Now, IRS Commissioner Daniel Werfel says the program will be permanent and the IRS will expand eligibility options for taxpayers.

“We are announcing significant enhancements to Direct File that will bring the service to millions more taxpayers in 2025,” Werfel said in a call with reporters Thursday. He said it is possible that more states could choose to join the program in 2025.

The pilot program in 2024 allowed people in certain states with very basic W-2s to calculate and file their tax returns directly with the IRS. According to the IRS, those who used the program claimed more than $90 million in refunds.

It was originally available to certain taxpayers in California, New York, Arizona, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming and Massachusetts.

States scheduled to be added in 2025 include: Alaska, Connecticut, Idaho, Kansas, Maine, Maryland, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania and Wisconsin.

Additionally, new eligibility standards allow participation by taxpayers with 1099 income and credits including, but not limited to, the Child and Dependent Care Credit, the Retirement Contribution Credit, and the Health Savings Account Deduction.

“Other countries have been offering their citizens the opportunity to do something like this for years,” Deputy Finance Minister Wally Adeyemo said on the call with reporters. Several nations in the Organization for Economic Cooperation and Development, including Germany and Japan, have similar systems with pre-filled tax forms.

The idea of ​​direct filing is not viewed favorably by the commercial tax preparation software companies that have made billions of dollars by charging people to use their software.

Additionally, a general IRS inspector general report released this week indicates that the IRS did not provide adequate privacy safeguards related to the IRS Free File Alliance. The alliance is a long-standing agreement between the IRS and some commercial tax preparation companies to provide free tax preparation services to low- and moderate-income taxpayers.

The Free File Alliance is separate from the Direct File program.

The IRS has been tasked with studying how it could set up a “direct file” system as part of the money it received from the Inflation Reduction Act signed by President Joe Biden in 2022. The IRS had nine months and $15 million to report on how such a program would work.