The Internal Revenue Service (IRS) is broadening its free tax filing initiative, making it accessible to over 30 million individuals across 24 states in the upcoming 2025 tax season. This expansion builds upon the successful pilot program launched in 12 states during the 2024 tax season. IRS Commissioner Daniel Werfel has announced that the program will become a permanent fixture, with plans to further increase eligibility opportunities for taxpayers.
The Direct File program enables individuals to calculate and submit their tax returns directly to the IRS, bypassing commercial tax preparation software. In its inaugural year, the program facilitated over $90 million in refunds for participating taxpayers. Initially available to select taxpayers in 12 states, the program will now be extended to include Alaska, Connecticut, Idaho, Kansas, Maine, Maryland, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania, and Wisconsin.
Moreover, the IRS will introduce new eligibility standards, allowing taxpayers with 1099 income and various credits, such as the Child and Dependent Care Credit and the Retirement Savings Contributions Credit, to participate in the program. This move brings the US more in line with other developed nations, such as Germany and Japan, which have long offered prepopulated tax forms to their citizens.
While the commercial tax preparation industry has expressed concerns about the direct file concept, the IRS remains committed to providing a free and convenient filing option for millions of Americans. The agency has been working to address data protection concerns related to its Free File Alliance, a separate program that provides free tax preparation services to low- and middle-income taxpayers. The expansion of the Direct File program is a key component of the IRS’s efforts to modernize its services and improve taxpayer experience.
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