After a successful pilot test, the IRS has announced that its free tax filing tool, IRS Direct File, will expand significantly in 2025. This government-run free tax software has proven to be beneficial for thousands of Americans, saving them millions of dollars in tax preparation fees.
The Direct File pilot program, which was initially launched in only 12 states, saw over 140,000 Americans successfully file their federal taxes for free, resulting in an estimated savings of $5.6 million in tax preparation fees.
The positive feedback from users during the pilot was overwhelming, with 9 out of 10 filers rating the software and free filing experience as “excellent” or “above average.” This underscores the user-friendly nature and effectiveness of the Direct File tool.
With the passing of the Inflation Reduction Act in 2022, the IRS was mandated to study the feasibility of a federally run free tax filing system. The Direct File program was a result of this study, aimed at providing a fully functioning software solution for taxpayers with simple tax situations.
Looking ahead to 2025, the IRS has confirmed the expansion of IRS Direct File to include all states, offering more taxpayers the opportunity to file their taxes for free and efficiently.
What to expect from IRS Direct File in 2025
While eligibility criteria for using IRS Direct File in 2025 have not been fully disclosed yet, the 12 states that participated in the pilot are expected to continue their involvement. Additionally, the IRS is inviting all states to partner with Direct File next year, although participation is voluntary for each state.
In the 2024 filing season, the program accepted “simple” tax returns with a wage limit of $200,000 for individuals and $250,000 for joint filers, sourced from W-2 wages, interest, or federal benefits like Social Security. However, income from gig work, itemized deductions, and certain tax credits were not accepted.
The IRS plans to relax these restrictions in 2025, with more details to be released in the coming months. This expansion aims to make the program more inclusive and accessible to a wider range of taxpayers.
Pushback on Direct File
Despite its success, IRS Direct File has faced criticism from various quarters. The tax-prep industry, in particular, has raised concerns over the program, with claims that it duplicates services already offered by private companies through the IRS Free File program.
Republican lawmakers have also voiced skepticism towards Direct File, citing potential drawbacks such as confusion over state tax filings and increased costs of implementation. These concerns highlight the need for ongoing evaluation and refinement of the program to address potential issues.
As the IRS prepares to expand Direct File in 2025, it is essential to consider feedback from stakeholders and ensure that the program continues to benefit taxpayers while addressing any challenges that may arise.
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[Source: [Money.com](https://money.com/irs-direct-file-return-2025/?xid=moneyrss)]
