The Internal Revenue Service (IRS) announced that it will make Direct File, a no-cost option for filing federal tax returns, a permanent feature starting in the 2025 tax season.
This decision follows a successful pilot program during the 2024 filing season and extensive feedback from various stakeholders.
The IRS is working to expand Direct File’s availability and eligibility for the 2025 tax season and beyond. This expansion aims to cover more tax situations and invite all states to partner with Direct File.
Additional details on the 2025 expansion will be announced in the coming months.
Pilot Program Success
During the 2024 pilot program, 140,803 taxpayers across 12 states used Direct File to submit their taxes. The IRS collected and analyzed data from the pilot, engaging with diverse groups of stakeholders, including Direct File users, state officials, and representatives from the tax community.
Feedback from hundreds of organizations, over a hundred members of Congress, and potential future users informed the decision to make Direct File permanent.
Although a limited number of stakeholders believe existing free electronic filing options by third-party vendors are adequate, the IRS received overwhelming support for more no-cost filing options.
Commissioner’s Recommendation
IRS Commissioner Danny Werfel recommended making Direct File a permanent option to Secretary of the Treasury Janet L. Yellen, who accepted the recommendation. “Many taxpayers across the nation want the IRS to provide more than one no-cost option for filing electronically,” said Werfel. “Adding Direct File strengthens the tax filing system and makes taxes easier for Americans, saving time and money.”
Expansion Plans
The IRS plans to expand eligibility for Direct File to more taxpayers nationwide. For the 2025 filing season, the IRS will collaborate with all interested states and expects several new states to join the program. The agency aims to gradually support most common tax situations, focusing on those impacting working families.
User Experience and Feedback
Direct File users reported high satisfaction levels, with 90% rating their experience as excellent or above average. Users praised the ease of use, trustworthiness, and cost-free nature of Direct File. A significant 86% of respondents said their experience increased their trust in the IRS, and the service received a Net Promoter Score (NPS) of +74, indicating high user satisfaction.
Direct File users also reported saving time and money, with many completing their tax filing in less than an hour and saving an estimated $5.6 million in tax preparation fees.
Technological Advancements
The development of Direct File involved a team of tax experts, digital product specialists, engineers, and data scientists from across the federal government and private sector partners. The pilot program allowed the IRS to test customer service innovations, such as integrating live chat support directly into the product.
Future Plans
The IRS will continue analyzing data and engaging with stakeholders to improve Direct File. The agency’s primary focus will remain on accuracy and comprehensive tax credit uptake to ensure taxpayers file correct returns and receive entitled refunds.
The IRS remains committed to offering multiple no-cost filing options and continues its partnership with Free File Inc., extending the Free File program for another five years. The IRS also supports other free filing programs, including the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs.
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