For the 2025 tax season, the Internal Revenue Service (IRS) is extending its free tax submission program, Direct File, to 24 additional states.
This substantial advancement enables millions of taxpayers to submit their returns directly to the IRS without the necessity of commercial tax software, thereby simplifying and reducing the cost of tax filing for a significant number of Americans.
The following information provides a comprehensive overview of the most recent developments, the states that are involved, and the advantages that the program will provide to ratepayers.
What is IRS Direct File?
IRS Direct File is a complimentary online service offered by the Internal Revenue Service that enables eligible taxpayers to submit their federal and state tax returns directly to the IRS without the need for paid software or professional tax preparation services.
The program’s success has resulted in a substantial expansion, following its initial introduction as a pilot in 12 states for the 2024 tax season.
Key features of Direct File
- Online tax filing is available at no cost for both federal and state taxes.
- Incorporates a broader spectrum of tax scenarios, such as credits and deductions.
- In comparison to other tax submission options, it is more user-friendly and secure.
States Eligible for Direct File in 2025
The availability of IRS Direct File in 24 states for the 2025 tax season will double the number from the pilot phase.
Alaska, Connecticut, Idaho, Kansas, Maine, Maryland, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania, and Wisconsin are the 12 new states that have joined the program.
The service will continue to be offered in the original 12 states that participated in the pilot phase, including California, Texas, and Florida.
| State | Participation in 2025 |
|---|---|
| Alaska | New |
| Arizona | Returning |
| California | Returning |
| Connecticut | New |
| Florida | Returning |
| Idaho | New |
| Kansas | New |
| Maine | New |
| Maryland | New |
| Massachusetts | Returning |
| Nevada | Returning |
| New Hampshire | Returning |
| New Jersey | New |
| New Mexico | New |
| New York | Returning |
| North Carolina | New |
| Oregon | New |
| Pennsylvania | New |
| South Dakota | Returning |
| Tennessee | Returning |
| Texas | Returning |
| Washington | Returning |
| Wisconsin | New |
| Wyoming | Returning |
What is New in 2025?
The expansion encompasses a broader variety of tax situations in addition to a greater number of states. Direct File will now support more complex tax returns in addition to the fundamental tax scenarios that were supported during the pilot, such as wage income (W-2), Social Security income, and unemployment compensation.
This encompasses 1099 forms for interest income exceeding $1,500, retirement income, and Alaska Permanent Fund dividends. Additionally, the Child and Dependent Care Credit, Premium Tax Credit, and Retirement Savings Contribution Credit will be subsidized.
Advantages of IRS Direct File
- Cost Savings: The elimination of the necessity to purchase commercial software or pay for professional tax preparation will enable millions of taxpayers to submit their taxes for free.
- Accessibility: Direct File simplifies the tax filing procedure by enabling users to file returns in a secure and efficient manner.
- Increased Tax Credit Claims: The 2025 expansion enables registrants to claim a broader range of tax credits, thereby enabling families and individuals to optimize their refunds.
- Security: The IRS has taken steps to ensure that Direct File provides a secure and dependable method of filing taxes, providing taxpayers with peace of mind, in response to concerns regarding data protection that were raised during previous tax seasons.
Challenges and Criticisms
The expansion of Direct File has encountered some resistance, particularly from commercial tax preparation companies, despite the positive reception from taxpayers.
These organizations contend that the availability of free IRS filing options could have a detrimental effect on their operations.
Furthermore, there are concerns regarding the protection of personal data within the broader tax-filing ecosystem, despite the IRS’s efforts to guarantee security.
Looking Ahead: Future Expansion
The IRS has indicated that it intends to further expand Direct File, potentially ensuring that it is accessible in all 50 states by 2026. Utah and Colorado are among the states that have expressed interest in participating in the program in the future.
In the 2025 tax season, Direct File will be accessible to more than 30 million taxpayers in the 24 participating states, and this figure is anticipated to increase as additional states join the program.
Summary of Key Changes for 2025 Tax Season
| Feature | 2024 Tax Season | 2025 Tax Season |
|---|---|---|
| Number of Participating States | 12 | 24 |
| Eligible Tax Situations | Basic (W-2, Social Security, Unemployment) | Expanded (1099s, Retirement, Child & Dependent Care Credit) |
| Tax Credits Covered | Earned Income, Child Tax Credit | Child and Dependent Care Credit, Premium Tax Credit, Retirement Credits |
| Eligible Taxpayers | ~15 Million | ~30 Million |
The expansion of IRS Direct File for the 2025 tax season is a significant milestone in the effort to simplify, simplify, and eliminate the cost of tax filing for millions of Americans. Taxpayers can anticipate a more efficient and cost-effective filing process as a result of the participation of 24 states and the ever-growing number of eligible tax situations.
This action is a significant advancement in the modernization of the tax system, as it reduces the need for commercial tax preparation services and ensures that a greater number of individuals can access their well-deserved refunds without incurring additional financial obligations.
