Americans could lose the option to file their taxes directly for free with the IRS, after House Republicans directed the Treasury Department to kill the program in a bill Monday.
The tool would be terminated 30 days after the bill’s enactment. The bill also calls for a task force to design a public-private partnership to replace existing IRS free filing options.
The free-filing tool known as Direct File was available to low- to moderate-income taxpayers in select states for two filing seasons. Direct File has irked tax preparation software companies and many Republicans who say it’s unnecessary and costly.
The IRS launched its own free electronic filing program in 2024 after Democrats’ 2022 law known as the Inflation Reduction Act set aside $15 million for the IRS to report on the feasibility of creating a direct e-filing tax return system, and subsequently Treasury leadership directed the IRS to create the pilot.
- For the 2025 filing season, over 30 million taxpayers in half the US states could participate.
- Trump’s pick to lead the Treasury Department, Scott Bessent committed to keeping Direct File for 2025 and said he would “consult and study the program and understand it better and make sure that it works to serve the IRS’s three goals: collections, customer service, and privacy.”
- The tool was expected to cost the US government more than $34 million for the 2025 filing season.
To contact the reporter on this story:
To contact the editors responsible for this story:
Learn more about Bloomberg Tax or Log In to keep reading:
Learn About Bloomberg Tax
From research to software to news, find what you need to stay ahead.
Already a subscriber?
Log in to keep reading or access research tools.