The U.S. Department of the Treasury and the IRS have announced that the number of states offering Direct File will double in Filing Season 2025 to 24. In Filing Season 2025, Direct File will be available in Alaska, Arizona, California, Connecticut, Florida, Idaho, Kansas, Maine, Maryland, Massachusetts, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, South Dakota, Tennessee, Texas, Washington, Wisconsin, and Wyoming. That means 62% of Americans will live in states offering Direct File.
In addition to expanding the number of participating states, Direct File will now cover additional types of income, credits, and deductions. It’s estimated that more than 30 million taxpayers will be eligible to use Direct File in the 2025 filing season.
Background
Direct File is driven by the Inflation Reduction Act (IRA), through which Congress tasked the IRS with delivering a report on the cost of developing and running a free direct e-file tax return system. The IRS released the report to Congress in May 2023.
According to the 2023 report, the IRS studied how an IRS-run free direct e-file tax return system might work. Most taxpayers surveyed by the agency reported interest in using an IRS-provided tool to prepare and file their taxes.
As part of a pilot program in 2024, eligible taxpayers in 12 states could file their federal tax returns for free directly with the IRS using Direct File. The pilot was announced in October 2023 and closed after the filing season ended in April 2024. The IRS called it a success, saying that several hundred thousand taxpayers across 12 states signed up for Direct File accounts, and 140,803 taxpayers filed their federal tax returns using the new service. Eligibility was limited to taxpayers with simple returns in those states.
(You can read what some taxpayers had to say to Forbes about their experiences here.)
In May 2024, U.S. Secretary of the Treasury Janet L. Yellen and IRS Commissioner Danny Werfel announced that the program would be permanent and available to all 50 states and the District of Columbia for the 2025 filing season. However, not all taxpayers will benefit immediately. Yellen acknowledged the challenges in rolling the program out to all taxpayers, saying, “Over the next few years, we will expand Direct File so that it supports all of the most common tax situations.”
The Program
Direct File provides a free and secure option for taxpayers with simple tax situations in participating states.
Taxpayer eligibility to participate in the pilot was limited to taxpayers with certain types of income, credits, and deductions—taxpayers with relatively simple returns. For Filing Season 2025, Direct File will support additional income types and credits for individuals who meet other eligibility requirements, including the Credit for Other Dependents, Child and Dependent Care Credit, Premium Tax Credit, Retirement Savings Contributions Credit, as well as the deduction for Health Savings Accounts.
Bilingual Support
In the Direct File Pilot, customer service representatives handled 38,600 chats with an average wait time of less than a minute and resolved taxpayer questions in nine minutes on average.
In the 2025 filing season, Direct File will offer a new chatbot to provide guidance on the eligibility checker. Live Chat will again be available in English and Spanish and will have enhanced authentication and verification features to allow customer service representatives to provide more information. Taxpayers will also be able to request a callback, during which IRS customer service representatives can provide technical support and answer basic tax questions in English and Spanish.
State Filing Options
During the pilot, four states built companion state tax filing tools that allowed Direct File users to file their state returns. Code for America previously partnered with two of those states—Arizona and New York—during the 2024 tax filing season and recently announced that Maryland and North Carolina had signed on for the 2025 tax filing season.
Code for America has now announced collaborations in New Jersey and Idaho to make FileYourStateTaxes—Code for America’s integrated state tax filing tool—available to Direct File taxpayers in those states, as with the Maryland and North Carolina partnerships announced earlier.
“Today’s announcements show that Direct File has the wind at its back,” said Amanda Renteria, CEO of Code for America. “Direct File’s functionality continues to grow in leaps and bounds, and states across the country are joining the effort to revolutionize and democratize access to the tax system. Code for America is proud to be playing a pivotal role in helping scale this transformative program.”
Code for America will also continue its partnership with the Arizona Department of Revenue, with Arizona continuing to use FileYourStateTaxes in filing season 2025. “In Arizona, we are putting money back in people’s pockets by making it free and easy to file their taxes,” said Arizona Governor Katie Hobbs. “I look forward to expanding this resource to even more Arizonans next tax season.”
In New York, the Department of Taxation and Finance will take over operations of the state tax filing tool beginning in filing season 2025—that’s in line with Code for America’s approach of collaborating with the government to develop a service and then empowering government to iterate as needed to sustain that service over the long term. New York’s pilot-year partnership with Code for America empowered the state to move quickly and deliver on the promise of simple, free state tax e-filing integrated with Direct File. This hand-off is the next step in both organizations’ shared vision for tax filing in the state.
“Code for America was a great partner in helping to develop Direct File in New York State,” said NYS Acting Tax Commissioner Amanda Hiller. “Their technological experience was invaluable and so was their advice on improving the consumer interface. We’re now moving from the start-up phase to the build-out phase and our close collaboration is continuing.”
Potential Savings
The IRS reports that the average American spends $270 and 13 hours filing their taxes. With Direct File, eligible Americans can file their taxes online for free, directly with the IRS, saving potentially hundreds of dollars.
“Thanks to the Biden-Harris Administration’s Inflation Reduction Act, the IRS is able to provide more than 30 million Americans with the option to file their taxes for free in an easy way,” said Secretary of the Treasury Janet L. Yellen.
“By doubling the number of participating states and expanding eligibility, Direct File has the potential to save Americans tens of millions of dollars in filing fees in the upcoming filing season, advancing the Biden-Harris Administration’s goal of reducing costs for American families. As Filing Season approaches, taxpayers in the 24 participating states should check their eligibility for this free and easy tool to see if it’s the right option for them.”
Many other countries have offered their taxpayers the option to file their taxes online for free, but the U.S. has not—until last year.
Next Steps
Treasury and the IRS are already looking ahead to the next-next filing season. According to a recent announcement, they have secured commitments from additional states to join Direct File in Filing Season 2026.
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