Direct File will be available in double the states of last year’s pilot for a greater variety of tax situations, greatly increasing the number of people who can now e-file their taxes completely free.
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State and eligibility expansion
For the 2025 tax filing season, eligible taxpayers in 24 states will be able to use Direct File: 54 added states, where Direct File will be available during the upcoming filing season. 12 states from last year’s pilot.
Direct File was available during the pilot last year in Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington State and Wyoming. The 2025 tax filing season will see Direct File available in Alaska, Connecticut, Idaho, Kansas, Maine, Maryland, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania and Wisconsin.
More than 30 million taxpayers in those 24 states would become Direct File eligible in 2025. States can still join Direct File in 2025, and several states have expressed or announced interest in (or participation in ) Direct File in 2026.
Beyond doubling the number of states where Direct File will be available, the service will extend to a greater variety of tax situations for the 2025 filing season. In a pilot last year, Direct File covered limited tax situations such as wage income reported on a W-2 form, Social Security income, unemployment compensation and certain credits and deductions. Direct File will support 1099s for interest income of $1,500 or more, retirement income, and the 1099 for Alaska residents reporting the Alaska Permanent Fund dividend for the 2025 filing season.
In the pilot, Direct File was available to support taxpayers who claimed the Earned Income Tax Credit, Child Tax Credit, as well as the Credit for Other Dependents. Direct File will also cover taxpayers claiming the Child and Dependent Care Credit, Premium Tax Credit, Credit for the Elderly and Disabled and Retirement Savings Contribution Credits this year. Direct File will also cover taxpayers claiming standard deductions and deductions for student loan interest and educator expenses and this year will cover Health Savings Account deductions for taxpayers. In the coming years, the IRS will progressively broaden the scope of Direct File to support the vast majority of common tax situations, with special emphasis on tax situations that tend to impact working families.
“We’re very happy with improvements to Direct File and the millions of additional taxpayers who will be able to use it this year,” IRS Commissioner Danny Werfel said. First of all, our aim is to simplify the tax filing experience and make it as quick and easy as possible for taxpayers to meet their obligations. As we expand and expand the service, direct file will be a big part of meeting that goal.”
Direct File service improvements
The direct file is a web-based service that can be run on laptops, desktop computers, tablets, or mobile phones. It will walk taxpayers through step by step, asking them a series of questions to prepare to file a federal tax return. Last year, thousands of Direct File users received assistance from speaking with an IRS customer service rep through a live chat feature in English or Spanish. After the taxpayers complete their federal tax return, the Direct File system then steers them to state tools to file their state tax returns.
New features for filing taxes quicker and easier will be included in Direct File for the 2025 filing season. A new chat bot to help ‘guide’ Direct File users through the eligibility checker and English and Spanish live chat will be available, as will a bonus for additional authentication and verification to offer customer service representatives more information.
And, continuing to focus on the user experience within the Direct File tool and the integration of state tax systems will be the cornerstone of the Direct File approach going forward, Werfel said. ‘First and foremost, we’ll focus on doing the right thing.” Taxpayers need to ensure they file a correct return and they will be entitled to the refund—which is to say accuracy and comprehensive tax credit uptake will be paramount concerns.”
Direct File’s role in the tax system
After a successful pilot during the 2024 tax filing season (more than 140,000 taxpayers across 12 states used Direct File) and thorough review of the service and its place within the broader tax system, the IRS is now ready to take the next step.
But taxpayers nationwide are telling the IRS it should offer more no-cost electronic filing options. Hundreds of organizations across the country heard directly from the IRS, more than 100 members of Congress, individual Direct File users, and those who might be using Direct File in the near future. The Direct File website was visited by millions of taxpayers who did not live in one of the 12 pilot states, as was anyone who did not live in one of the 12 pilot states and asked Direct File web chat assistors to make Direct File available in their state.
The IRS announced earlier this year that Direct File will become a permanent way to file taxes, with the service in talks with all states that want to come on board. Direct File will remain just one of the important options from which taxpayers will choose in the years to come and will work in conjunction with critical partners like tax professionals and commercial software providers who play such a vital role in providing success for such an important system as the nation’s tax system.
In addition, the IRS said another side effect of the Direct File pilot was heightened awareness of all free filing options, including an uptick in Free File use. The IRS continues to partner with Free File, Inc., which has served taxpayers for more than two decades in offering free commercial software. Free File was extended for five years last spring when the IRS inked a deal with industry to keep it here. While the IRS continues to expand Direct File, which is its primary free option, it also will be increasing all free options for use by taxpayers, including Free File, VITA and TCE—all programs that experienced greater utilization and interest last year.
Werfel said Direct File ‘is an important part of a stronger, more robust tax system that allows taxpayers more choices as to how they file.’ “It is an important tool for the IRS to provide taxpayers with a number of ways to interact with us so we can meet taxpayers where they are and give taxpayers the options they want to receive service from the IRS, when it works for them, to meet their tax obligations as efficiently and quickly as possible.”
The filing season is open: Direct File will begin accepting tax returns.