Updated May 30, 2024 - Politics & Policy

IRS opening free online tax filing program to all states

IRS Direct File photo illustration

People use IRS Direct File at the Internal Revenue Service Building. Photo: Tasos Katopodis/Getty Images for Economic Security Project

The Treasury Department on Thursday announced that the IRS' Direct File program, a free online tax filing program, will be made permanent for the 2025 tax season with all 50 states and Washington D.C. invited to participate.

Why it matters: Making the popular pilot program permanent will be a boon for Americans who won't have to spend money to file their taxes, and could deal a massive blow to private tax filing services such as TurboTax.

  • Treasury announced earlier this month that more than 140,000 people participated in the Direct File pilot program in a dozen states claiming more than $90 million in refunds.
  • The pilot exceeded its 100,000-person target during this past tax season.

What they're saying: "President Biden is committed to saving Americans time and money and ensuring families receive the tax benefits they're owed," Treasury Secretary Janet Yellen said in a statement.

  • "Providing a free tool to all Americans who want the option to file directly with the IRS is key to achieving those goals."
  • The pilot program targeted people with simple tax returns based on W-2 forms. In her remarks today Yellen said that over the next few years they will expand Direct File to support more situations.

What to watch: Some Democratic lawmakers have championed the Direct File program – and now say they want to go even further.

  • Rep. Brad Sherman (D-Calif.), an accountant and senior member of the House Financial Services Committee, told Axios in April that he wants to go "way beyond Direct File," calling for a "self-populating form."
  • "Why in the heck should you have to fill out your return when the government has all the information. They know what's on your W-2 form before you do. They know what's on your 1099 … Do you know how many mistakes people make?"
  • Sen. Elizabeth Warren (D-Mass.), another top proponent of expansion, said in a statement: "I urge every state and the District of Columbia to adopt the Direct File program."

"This year's Direct File pilot proved that the government is more than capable of providing a free, public e-filing service that saves taxpayers time, money and headache," the Coalition for Free and Fair Filing, a group of 125 national and state organizations that pushed for free filing.

  • "[N]ot only did the IRS make the right decision to continue the program, but it should be scaled to reach a wider swath of Americans.

The other side: Taxpayers Protection Alliance spokesperson Kara Zupkus said in a statement that expanding the program will "radically increase the IRS's authority and scope" and "have devastating consequences."

  • Private tax services "have every incentive to find the deductions that will yield them the best return," Zupkus said, adding that the IRS wants "to extract as much as possible from the taxpayer."
  • "This is a solution in search of a problem ... The only result here will be more delays and less money in the pocketbooks of hard-working Americans."

Go deeper: Tax refunds are bigger, but fewer people are getting them

Editor's note: This story was updated with additional reporting.

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