The IRS has announced the suspension of its Direct File program for the upcoming tax filing season, a move that will affect taxpayers in 25 states who relied on this free guided tax software. Treasury Secretary Scott Bessent, the interim IRS commissioner, emphasized that the decision stems from a belief that there are “better alternatives” available and that the private sector is better suited to handle tax preparation needs.
This decision follows the implementation of the “One Big, Beautiful Bill,” which directed the IRS to create a task force to assess the Direct File program’s financial implications and consider options for its replacement. Ultimately, the legislation urged the IRS to broaden the reach of the Free File initiative, which provides free federal tax preparation software through private companies for individuals earning up to $84,000 annually. Currently, the Free File program is accessible to roughly 70% of taxpayers; however, only about 2% utilized it during the last filing season.
Leading up to this suspension, Republican lawmakers had voiced concerns about the Direct File program, labeling it as “unauthorized and wasteful.” The program incurred operational costs of approximately $41 million for the 2024 tax year, but it notably saw only 0.2% of all tax returns—equating to 296,531—processed through this system.
Despite its low usage rates, Direct File garnered favorable responses from users. A survey conducted by the Urban Institute in December 2024 revealed that nearly three-quarters of tax filers were interested in the program. Notably, 94% of users rated their experience as ‘Excellent’ or ‘Above Average’ according to a report released for the IRS 2025 filing season.
The impact of the Direct File program’s suspension is significant, as it was accessible to all participating taxpayers irrespective of income level, offering a free means of filing taxes. According to the National Taxpayers Union Foundation, Americans typically spend an average of $290 on tax preparation services.
For the 2026 tax filing season, taxpayers will still have access to various other free filing options, including:
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IRS Free File: This program is available for individuals with an Adjusted Gross Income of $84,000 or less, utilizing partner companies to guide users through their federal tax return completion via a simple questionnaire.
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Volunteer Income Tax Assistance (VITA): This initiative caters to individuals earning $67,000 or less, those with disabilities, and non-English speakers, providing certified volunteers to assist with tax filing.
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Tax Counseling for the Elderly (TCE): Available for taxpayers aged 60 and above, this program offers specialized assistance on pensions and retirement-related tax concerns.
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Private Filing Options: Some private companies continue to offer free filing services for certain income levels or occupational categories.
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Free File Fillable Forms: Available for download and electronic submission directly through the IRS, these forms provide a no-frills option for all taxpayers, though they lack the kind of guidance that many may find challenging.
These alternatives assure that, while Direct File may no longer be available, taxpayers still have various avenues to navigate the complexities of filing their returns without incurring costs.
