As the 2025 tax season approaches, the IRS has begun to open its free tax filing service for every state. That means many are gearing up to file their taxes with the IRS Direct File program. It allows taxpayers to file their federal tax returns online, though for those outside of Arizona, California, Masschusetts and New York, state tax must still be filed separately. This year, however, IRS Direct File will be an option for many additional taxpayers.
According to the Washington Post, four states — New Jersey, New Mexico, Oregon and Pennsylvania — have announced they will also begin supporting the tax filing service. What began as a 12-state pilot in 2024 is continuing to grow, with every state invited to offer the option permanently. Should the new group of states make their intention to join official, that number will grow to just 16.
Unfortunately for the rest of the country’s taxpayers, time is running out for the remaining states to get on board. That’s because they need to have an online state tax filing system in place to be eligible for the program. With the tax season only months away, states that haven’t yet met the requirements are scrambling to implement the necessary infrastructure to ensure their residents can take advantage of this convenient filing option. As the Washington Post reports, Deputy Treasury Secretary Wally Adeyemo estimates that it would be “hard to set up a tax-filing website” should the states wait too long after the end of August. That’s only a few weeks away.
The Inflation Reduction Act of 2022 mandated that the IRS investigate the cost and feasibility of creating and running its own free online tax filing system. After reporting its findings to Congress in May 2023, the agency then began developing the free software. On Jan. 29, 2024, the Direct File system went live for preselected taxpayers, and on Feb. 21 the IRS opened the test program to new participants before briefly closing it. On March 12, the program reopened to the public. More than 140,000 people submitted accepted tax returns through the system before it closed on April 15.
Read more: I Tested IRS Direct File. The Free Tax Software Lacks One Key Feature It Needs to Compete
Here’s everything we know about how the new IRS free tax filing software works and how the program will expand for the 2025 tax filing season.
What is IRS Direct File?
Direct File is the name of the new free tax filing system that the IRS launched for the 2024 tax season. Taxpayers using Direct File answer questions similarly to those in popular tax software like TurboTax or H&R Block, and the software uses the provided answers to complete tax returns that can you can then submit electronically on the IRS website.
Which taxpayers can file income tax returns with IRS Direct File?
The 2024 pilot program for Direct File was only available to taxpayers in 12 states — Arizona, California, Florida, Massachusetts, New Hampshire, New York, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming. To participate, residents of those states could not have earned income in other states.
