The Internal Revenue Service recently announced it would be expanding its free tax filing program, Direct File, for 2025, making it accessible in all 50 states.
Launched in time for the 2024 filing season and available to people with simple returns in 12 states, Direct File provides step-by-step guidance to taxpayers filing federal returns. It does not prepare state taxes.
There is no income threshold to use Direct File, unlike the Free File program that allows only those taxpayers who earn $79,000 or less to use it.
Direct File’s 2024 pilot cost almost $32 million and will be supported by approximately $75 million in budget for fiscal year 2025, though the actual cost will depend on how many people use it. Over time, the IRS plans to increase the number of eligible taxpayers so it can support the most common tax situations.
Direct File is just one of a number of new initiatives underway at the IRS after the agency received funds totaling $80 billion via the Inflation Reduction Act. With the new funding, which is spread over a decade, the IRS has improved phone service, is planning to digitize all paper-filed tax returns and has made improvements to its “Where’s My Refund?” service, wherein taxpayers can get real-time information about the status of their returns.
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