The Internal Revenue Service (IRS) has added 12 states to its Direct File program and expanded eligibility for more types of taxpayers.
The IRS launched its Direct File pilot in 12 U.S. states in March 2024, which allowed taxpayers to submit simple tax returns direct with the government agency completely free of charge, eliminating the need to use a paid-for third party provider.
During the pilot last year, Direct File was available in Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington State and Wyoming.
Now, the program has been expanded to an additional 12 states. For the 2025 tax filing season, Direct File will also be available in Alaska, Connecticut, Idaho, Kansas, Maine, Maryland, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania and Wisconsin.
The expansion means 30 million Americans will be eligible to file their tax returns completely free of charge without the need for a third party provider next year. In 2024, 140,000 Americans used the service.
“We’re excited about the improvements to Direct File and the millions more taxpayers who will be eligible to use the service this year,” IRS Commissioner Danny Werfel said in a statement issued on October 3. “Above all, our goal is to improve the experience of tax filing itself and help taxpayers meet their obligations quickly and easily. Direct File will be a critical part of achieving that goal as we expand and improve the service.”
What’s New With Direct File?
Last year the scope of the program was somewhat limited, with only those with simple tax returns able to use the service. But for 2025, what can be submitted has been expanded.
In 2024, the following incomes could be reported using Direct File:
- W-2 form.
- Social Security income.
- Unemployment compensation.
For the 2025 filing season, Direct File will also support:
- 1099’s for interest income greater than $1,500.
- Retirement income.
- 1099 for Alaska residents reporting the Alaska Permanent Fund dividend.
The types of tax credits accepted will also be expanded. During the 2024 pilot, Direct File supported taxpayers claiming the Earned Income Tax Credit, Child Tax Credit and Credit for Other Dependents.
In 2025, Direct File will also cover taxpayers claiming the following:
- Child and Dependent Care Credit.
- Premium Tax Credit.
- Credit for the Elderly and Disabled.
- Retirement Savings Contribution Credits.
- In addition to covering taxpayers claiming the standard deduction and deductions for student loan interest and educator expenses, Direct File will also support taxpayers claiming deductions for Health Savings Accounts.
There will be new customer service additions to Direct File this year as well, with the IRS announcing that a new chat bot will be available to help guide users through the eligibility checker.
“User experience, both within the Direct File tool and the integration with state tax systems, will continue to be the foundation for Direct File moving forward,” Werfel said. “We will focus—first and foremost—on continuing to get it right. Accuracy and comprehensive tax credit uptake will be paramount concerns to ensure taxpayers file a correct return and get the refund to which they’re entitled.”
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