Trump Administration Ends Free IRS Tax Filing Program
Americans just lost a free option for filing taxes. The Trump administration shut down IRS Direct File, a program that let people file federal returns directly with the IRS without paying tax preparation companies.
Direct File launched as a pilot during Biden's presidency for tax year 2023 in 12 states. It expanded to 25 states the next year. Now it's gone entirely for 2026.
Critics called it expensive and underused. Supporters said it was necessary because tax prep companies have been scamming people for years. Both things can be true.
Why It Got The Axe
The House Ways and Means Committee released a report showing Direct File had the lowest participation of all free tax programs. Just under 141,000 returns filed during the 2023 pilot with a dozen states participating.
Year two with 25 states? Only 296,531 returns—less than 0.5% of approximately 146 million total returns filed. Meanwhile, the program cost taxpayers at least $41 million. That's roughly $138 per return filed.
The report noted that $41 million "understates the true costs" because not all agency support functions were included. So, the real price tag was higher.
House Ways and Means Chairman Jason Smith from Missouri said in a statement that "taxpayers simply didn't want to use the costly and ineffective government-run Direct File tax program that would have made the IRS the tax preparer, filer, and auditor for Americans."
Why Direct File Existed
Senator Ron Wyden, who wrote the bill creating Direct File, didn't mince words: "The existing free options were insufficient and the big tax prep companies had been caught red-handed using deceptive practices to scam taxpayers into overpaying."
That's the quiet part said loud. Tax preparation companies have spent years making "free" filing nearly impossible to find while funneling people toward paid services. ProPublica has documented this extensively. TurboTax and H&R Block lobbied against simple, free filing for years.
Former Treasury Secretary Janet Yellen estimated the average American taxpayer spent $270 and 13 hours filing their tax return. That's money going to tax prep companies instead of staying in people's pockets.
Direct File was supposed to fix that by letting people file directly with the IRS for free. It turns out most people either didn't know about it or didn't trust it enough to use it.
What Happens Now
Americans who used Direct File will need to file paper returns or use other software, said Richard Pon, a CPA in San Francisco. "But there are low cost software providers everywhere, and some offer free versions for those basically with a W2 or interest."
Here are the remaining free options:
IRS Free File: Eight private companies partner with the IRS to offer free software for eligible taxpayers. Last year you qualified if your 2024 adjusted gross income was $84,000 or less. This also includes fillable forms anyone can use regardless of income if you're comfortable preparing your own return.
VITA/Tax Counseling for the Elderly: IRS-certified volunteers at community organizations provide free help for eligible taxpayers—working families, elderly, disabled, people with limited English. AARP Foundation's Tax-Aide is the nation's largest free volunteer program for tax prep. Nearly 28,000 volunteers helped almost 1.7 million taxpayers file returns in 2024.
MilTax: Department of Defense program offering free federal and up to three state returns for military members and some veterans with no income limit.
H&R Block Online Free Edition: H&R Block stopped participating in Free File but offers its own free service. According to their website, 52% of taxpayers qualify if you have a straightforward return.
TurboTax Free Edition: Roughly 37% of filers qualify for TurboTax's free version if returns are simple.
The Bigger Picture
Direct File cost too much for too few users. That's legitimately true based on the numbers.
But it's also true that tax preparation companies have actively worked to keep tax filing complicated and expensive so they can profit from it. Other countries let citizens file taxes easily and for free through government systems. The U.S. makes it deliberately difficult because there's money to be made.
Direct File tried to change that. Not enough people used it to justify the cost. Whether that's because people didn't know about it, didn't trust the IRS to handle both filing and auditing, or genuinely preferred other options is unclear.
Either way, it's dead. Free alternatives exist, but they're run by the same companies that lobbied against Direct File or have strict eligibility requirements.
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