IRS Shuts Down Free Direct File Tool—Here’s What Taxpayers Can Use Instead

• The IRS is suspending the Direct File program, a free guided tax software for taxpayers in 25 states, for the upcoming filing season.

• Other free federal tax preparation programs will still be available during the 2026 tax filing season for many taxpayers.

A free tax preparation program used by thousands of taxpayers will not be available in the upcoming filing season.

The IRS Direct File, which provided a free guided tax software directly from the IRS website to taxpayers in 25 states, has been suspended. Treasury Secretary Scott Bessent, also the current interim IRS commissioner, told reporters that there are “better alternatives” and “that the private sector can do a better job.”

Following an order from the “One Big, Beautiful Bill,” an IRS task force was recently created to research the costs of Direct File and the price of replacing the program. The bill called for the IRS to expand its use of the Free File program, a free federal tax preparation software distributed by private sector companies for taxpayers with an annual income of $84,000 or less. The program is currently available to approximately 70% of taxpayers, but only about 2% of taxpayers utilized it in the last tax filing season.

Republican lawmakers have previously called for the elimination of the Direct File program, arguing it is “unauthorized and wasteful.” The program cost approximately $41 million to operate during the 2024 tax year. Some 0.2% of all tax returns—a total of 296,531—were filed using Direct File during that year.

Although the program has low utilization, the majority of taxpayers held a favorable view of it. Almost three-fourths of tax filers were interested in using Direct File, according to a December 2024 survey by the Urban Institute. Of the taxpayers who used Direct File this year, 94% said their experience was ‘Excellent’ or ‘Above Average’ in the IRS 2025 filing season report.

The Direct File program was available to all taxpayers in participating states, regardless of their income level, to file their taxes for free. On average, Americans spend $290 on tax preparation sites and advisors to file their taxes, according to a report from the National Taxpayers Union Foundation.

For the 2026 filing season, other federal programs will still offer a free guided filing experience to many taxpayers. Taxpayers will also always have the option to fill out their own return electronically or on paper for free.

• IRS Free File

• This guided tax software is available to taxpayers with an Adjusted Gross Income of $84,000 or less. It connects taxpayers with an IRS partner company, where taxpayers can complete a simple questionnaire that guides them through their federal tax return.

• Volunteer Income Tax Assistance program

• This program provides free tax counseling to individuals who earn $67,000 or less, have a disability, and speak limited English. The service provides taxpayers with a certified volunteer who can assist them in filing their tax return.

• Tax Counseling for the Elderly

• In addition to the Volunteer Income Tax Assistance program, taxpayers aged 60 or older can receive free tax help, specifically regarding pensions and other retirement-related questions.

• Free Private Options

• Some private filing companies offer free filing options for taxpayers with specific income levels or occupations.

• Free File Fillable Forms

• These forms are available for download and electronic submission through the IRS for all taxpayers. However, these forms are not guided and can be harder to navigate for many.

Read the original article on Investopedia