IRS to make Direct File permanent based on success of season pilot

The Internal Revenue Service is going to make Direct File a permanent option for filing federal tax returns starting in the 2025 tax season.

Further, the IRS is exploring ways to expand Direct File to make more taxpayers eligible in the 2025 filing season and beyond by expanding its availability across the nation.

The decision follows a successful pilot program during the 2024 filing season that was limited to 140,803 taxpayers in 12 states. The IRS closely analyzed data collected during the pilot, held numerous meetings with diverse groups of stakeholders, and gathered feedback from Direct File users, state officials and other professionals across the tax landscape. Further, the IRS heard from hundreds of organizations, more than a hundred members of Congress, and from those interested in using Direct File in the future.

IRS Commissioner Danny Werfel made the recommendation to Secretary of the Treasury Janet Yellen to make Direct File permanent, citing overwhelming satisfaction from users.

“The clear message is that many taxpayers across the nation want the IRS to provide more than one no-cost option for filing electronically,” Werfel said. “So, starting with the 2025 filing season, the IRS will make Direct File a permanent option for filing federal tax returns. Giving taxpayers additional options strengthens the tax filing system. And adding Direct File to the menu of filing options fits squarely into our effort to make taxes as easy as possible for Americans, including saving time and money.”

For the 2025 filing season, the IRS will work with all states that want to partner with Direct File, and there will be no limit to the number of states that can participate in the coming year.

In addition, the IRS is exploring ways to gradually expand the scope of tax situations supported by Direct File. The agency’s goal is to expand Direct File to support most common tax situations, with a particular focus on those situations that impact working families.

“User experience – both within the product and integration with state tax systems – will continue to be the foundation for Direct File moving forward,” Werfel said. “We will focus, first and foremost, on continuing to get it right. Accuracy and comprehensive tax credit uptake will be paramount concerns to ensure taxpayers file a correct return and get the refund they’re entitled to. And our North Star will be improving the experience of tax filing itself and helping taxpayers meet their obligations as easily and quickly as possible.”

As a permanent filing option, Direct File will be one option among many from which taxpayers can choose. It is not meant to replace other important options by tax professionals or commercial software providers, who are critical partners with the IRS in delivering a successful tax system for the nation.

Overall, the analysis found that 90 percent of taxpayers who used Direct File ranked their experience as excellent or above average. They added that it made the tax filing experience easier, as filing taxes with Direct File generally took less than an hour. The Treasury Department estimates that Direct File users saved $5.6 million in tax preparation fees this filing season.

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