The IRS’ free direct online tax filing tool is being eliminated. Here’s what you need to know.-awdailynews

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2025-11-13

The IRS’ free direct online tax filing tool is being eliminated. Here’s what you need to know.

The Internal Revenue Service’s free online filing system is no more.

First rolled out as a limited pilot in 2024 under the Biden administration, the Direct File program allowed taxpayers in certain states to file federal tax returns online for free directly with the federal government. It was available in 25 states to roughly 30 million taxpayers for the most recent tax-filing season and used for nearly 300,000 returns. Many who used the program reported a good experience.

But the Trump administration and Republicans had been itching to eliminate Direct File, with the Treasury Department saying in an October report to Congress that participation in the program was low and the cost of running it was high, while existing programs like Free File — a long-standing partnership with private tax preparation companies — were not being “fully promoted or optimized.”

The October report announced that the IRS would suspend Direct File as a result, and Treasury Secretary Scott Bessent told reporters last week that the private sector “can do a better job.” Tax preparation companies had also pushed back against the program.

“For-profit tax preparers obviously saw this as a threat to their business model,” Vanessa Williamson, a senior fellow at the Urban-Brookings Tax Policy Center, told Yahoo Finance.

For many taxpayers, the goal has long been a simple filing system in which tax forms are at least partially pre-populated with filers’ accurate information — mirroring a process that already exists in other countries. Direct File was working toward that.

“A big part of the business model for the brand-name tax preparers is regular folks with relatively simple returns,” Williamson said. “They had stepped into what was basically a gap in government services. It’s absurd — no other country does it the way that we do, and in no other country is it so hard to file your taxes that you have to pay someone to do it.”

Ending the program, which only existed for two tax seasons, leaves Americans without an easy, free-to-use option to file directly with the IRS ahead of what’s expected to be an especially complicated tax season.

Free File is available only for taxpayers with an adjusted gross income of $84,000 or less, and even some of those filers found themselves having to pay for services they thought were free after inputting all of their information, Williamson said.

Learn more: What if I can’t pay my taxes? 5 ways to manage your bill.

Adam Ruben, vice president of campaigns and political strategy at the Economic Security Project, said Direct File had saved users an average of $160 in filing fees.