IRS ends Direct File program

The Internal Revenue Service has shut down its Direct File free tax-filing program, sending an email to the 25 states that offered it this year.

“IRS Direct File is now closed for Filing Season 2025,” IRS product manager Cynthia Noe wrote in an email to state comptrollers. “This includes the State API to export federal returns from IRS Direct File to integrated state filing tools, which is now disabled. Taxpayers will no longer be able to access their returns via directfile.irs.gov. They can access a summary of their return, also known as a transcript, online via their IRS Online Account, or a full copy of their return via mail by submitting Form 4506. IRS Direct File will not be available in Filing Season 2026. No launch date has been set for the future. Thank you for participating in IRS Direct File during Filing Season 2025, and for your collaboration and partnership to create a free, simple way for taxpayers to file their federal and state taxes.”

The email was sent to the state departments of revenue and technical points of contact for the 25 states participating in IRS Direct File for filing season 2025.

A message on the IRS’s Direct File page on Thursday now says, “Direct File is closed. More information will be available at a later date.”

Treasury Secretary Scott Bessent, who is also the acting commissioner of the IRS, told reporters Wednesday there are “better alternatives” to Direct File. “It wasn’t used very much, and we think that the private sector can do a better job,” he said, according to the Associated Press.

Speculation about the shutdown of Direct File began spreading earlier this year after Elon Musk, who was heading the U.S. DOGE service, posted on X that he had “deleted” 18F, the digital services team that helped build the Direct File system ahead of its initial pilot test last year. 

The Direct File system expanded from pilot tests in 12 states last year to 25 states this year, aided by the nonprofit group Code for America and its FileYourStateTaxes project. A survey of over 1,000 Direct File and FileYourStateTaxes users reportedly found that 98% of respondents said they were either satisfied or very satisfied with the programs, according to the Federal News Network. Last year, then-IRS Commissioner Danny Werfel announced plans to make the Direct File program permanent, but the program has been repeatedly attacked by Republican lawmakers in Congress and the tax prep industry.

Senate Finance Committee ranking member Ron Wyden, D-Ore., issued a statement slamming the closure: “If an opportunity presents itself to stick it to working people and drive up their costs for the benefit of giant corporations, you can count on the Trump administration to seize it,” he said in a statement Thursday. “Trump and Bessent had already gutted the team that ran the Direct File program, so the outcome of this study was predetermined and the report itself is a sham. I wrote the bill that created Direct File because the existing free options were insufficient and the big tax prep companies had been caught red-handed using deceptive practices to scam taxpayers into overpaying. The lesson is, the Trump administration is a threat to any public service that saves Americans time, hassle and money.”

An IRS spokesperson referred questions to state tax departments. A spokesperson for the New York State Department of Taxation and Finance told Accounting Today, “While Governor [Kathy] Hochul is working to make New York State more affordable, the Trump administration is actively choosing to eliminate programs that have saved taxpayers money. The Trump administration’s decision to kill the Direct File program shows how far they’ll go to put special interests over the needs of everyday Americans. During a time when inflation and the cost of living are already so high, programs like this should be preserved to help Americans keep more of their hard earned money.”

As part of the One Big Beautiful Bill Act that was enacted in July, Republicans on the House Ways and Means Committee included a directive to study the impact of the program based on years of oversight work, resulting in a report and subsequent suspension of the program.

“It wasn’t just unlawful for Democrats to expand the authority of the IRS without congressional authorization, it turns out that taxpayers simply didn’t want to use the costly and ineffective government-run Direct File tax program either that would have made the IRS the tax preparer, filer, and auditor for Americans,” House Ways and Means Committee chairman Jason Smith, R-Missouri, in a statement said. “There was nothing ‘free’ about this program. It cost the American people at least $41 million for tax year 2024, an estimate that doesn’t account for the additional costs borne by filers to file their state taxes separately, or by the agency overall to support the program. That’s at least $138 per return, when existing programs like Free File cover more people and operate at little cost to taxpayers. No wonder, according to the Inspector General, Democrats had to get Leftist organizations to write fake studies in support of the program. Even the Obama-Biden chief information officer said the new system was ‘guaranteed to fail.’ American workers and families deserve a tax filing system that meets their needs and will help them see the benefits of the working families tax cuts Congress passed earlier this year, including no tax on tips, no tax on overtime, and no tax on Social Security. Fortunately, Treasury is finally shifting resources towards solutions that work, including IRS-affiliated free tax preparation programs, as well as the public-private partnership for free tax filing and improving technology at the agency. Ways and Means Republicans have fought hard for years to ensure resources go where they are needed to help taxpayers, rather than dump more funding into programs that are failing. Finally, we have an Administration that will do the right thing.”

A Treasury Department spokesperson forwarded a link to the study, which was released by the Treasury last month. The One Big Beautiful Bill Act had initially included a provision for terminating Direct File in the version of the bill passed by the House, but the version of the bill that was ultimately passed by the Senate and later the House only mandated the study. The report seems to recommend that Direct File be shut down.

“American taxpayers have access to several options for free income tax return preparation and filing, including longstanding public-private partnerships and in-person volunteer programs,” it said in its executive summary.  “Under the prior Administration, the Internal Revenue Service (IRS) created an option for eligible taxpayers to file their federal individual income tax return online directly with the IRS at no direct cost to the user. First launched as a pilot program for tax year 2023, Direct File was available to taxpayers in 12 states. At the conclusion of the pilot program, a total of 140,803 returns had been filed by users and accepted by the IRS. For tax year 2024, Direct File was available to taxpayers in 25 states, and, as of April 20, 2025, a total of 296,531 returns had been filed by users and accepted by the IRS. Direct File had low overall participation and relatively high costs and burdens on the federal government, compared to other free filing options. For tax year 2024, returns submitted using Direct File constituted less than 0.5 percent of the approximately 146 million returns filed. Direct File had a cost to the federal budget of at least $41 million for tax year 2024 returns, or a cost of at least $138 per return accepted through Direct File. Because not all agency support functions were included in the cost of Direct File, the $41 million understates the true costs of developing, administering, and supporting Direct File for tax year 2024. Direct File’s complexity and technical demands also diverted IRS resources from other core priorities. Meanwhile, successful, longstanding programs, such as Free File (which already covers a broader eligibility population than Direct File and operates at little cost to the government), were not fully promoted or optimized during this period.”

The IRS released the source code for Direct File on the programming site GitHub in June, enabling other developers to create similar programs, although they would still need to get access to the IRS and state portals. 

Last month, the Treasury Inspector General for Tax Administration released a report that initially said, “We are also evaluating whether the IRS met all legislative requirements to terminate Direct File (an IRS-developed free tax return preparation tool) and report to Congress on a potential replacement system,” although that was later revised by TIGTA to say, “We are also assessing if the IRS met all legislative requirements related to Direct File in the One Big Beautiful Bill Act.”

Taxpayers will now need to look for other free alternatives. “It’s so hard to talk about Direct File without politics,” said James Creech, a principal with Baker Tilly’s specialty tax practice. “I’m sad to see it go because I think it did a great job. It seemed like it offered a unique opportunity. You can file for free on TurboTax if you’re below the threshold. I’m sorry that program never got to explore its full potential.”