Message Sent
Thank you for your inquiry. We will respond to you as soon as possible.
The Internal Revenue Service (IRS) announced that there are 24 states participating in the Direct File program for the 2025 Filing Season. This opens the Direct File option to an estimated 30 million taxpayers.
The IRS reports that the average American spends $270 and 13 hours of time to file taxes. The Direct File program allows free online filing for basic returns. This can save each individual hundreds of dollars and hours of time.
Secretary of the Treasury, Janet Yellen, noted, "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."
During 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.
The Direct File software is available to cover simple tax situations. It is also available in Spanish and works on a smartphone. The Direct File program is designed to show taxpayers the calculations involved to reduce errors and ensure they receive the maximum refund. The IRS notes this is similar to tax programs in other countries that offer a free online filing option.
In Filing Season 2024, the Direct File pilot program in 12 states served 140,000 taxpayers. Approximately 90% of these taxpayers rated their experience as "excellent" or "above average" in a survey of 11,000 users. Most were able to file their taxes in one hour or less.
With 24 states offering Direct File in Filing Season 2025, approximately 62% of Americans will be in states offering the program. While the program will cover additional types of income, credits and deductions, only 30 million taxpayers will be able to use the new program.
There are several specific categories of individuals who will be able to use the program. It is available for individuals with W-2 income who claim the Earned Income Tax Credit or Child Tax Credit. It will also allow the filer to have student loan interest or Social Security income. The new program will include the Credit for Other Dependents, the Child and Dependent Care Credit, the Premium Tax Credit, the Retirement Savings Contribution Credit and the deduction for Health Savings Accounts.
The IRS also promises enhanced customer service support. The previous filing season involved IRS customer service representatives who handled 38,600 visits. The average taxpayer’s wait time was less than one minute and most calls lasted an average of nine minutes. 90% of the individuals who used Direct File customer support rated their experience as "above average" or “excellent."
There will be a new chat bot in 2025 to help individuals determine whether they are eligible for the program. There will be support in English and Spanish. Taxpayers may also request a call back from an IRS customer service representative.
Editor's Note: The IRS Direct File program is moving forward with two major challenges. First, the new version will attempt to cover more complicated federal tax returns. Second, there are more links to state systems. Many states with an income tax are developing a state filing system. The initial state versions will also be limited to simple returns. Future versions are likely to cover more complex federal and state tax situations. The IRS expects major growth for the Direct File program over the next several years.
Plan Ahead for End-of-Year Gifts in 2024
Benefit in 2024 With an IRA Charitable Rollover
