IRS Officially Kills Direct File, a 'Failed' Program That Offered Millions Free Tax Prep
The IRS Direct File program — a free, federally funded tax filing service — will not be available for the 2026 tax season, the agency informed state officials last week.
"I think that we have better alternatives," Treasury Secretary Scott Bessent told reporters at the White House Wednesday. "It wasn't used very much, and we think that the private sector can do a better job."
Direct File was launched as a pilot in 2024 with the goal of simplifying tax filing for Americans and providing an accessible alternative to third-party services like TurboTax and H&R Block, which have a reputation for upselling users. This year, IRS Direct File expanded; it was available to certain taxpayers in 25 states before its termination.
An IRS memo to states last week confirmed what many have long expected was coming. In April, Trump administration officials referred to Direct File as a "failed program," citing its steep price tag relative to how many taxpayers used it.
On Nov. 3, IRS official Cindy Noe informed state tax offices by email that Direct File is now closed for the 2025 tax filing season — and won't be coming back.
"IRS Direct File will not be available in Filing Season 2026. No launch date has been set for the future," she added, with a brief line thanking states for "collaboration and partnership to create a free, simple way for taxpayers to file their federal and state taxes."
A copy of the letter was shared with Money by a spokesperson for New York Gov. Kathy Hochul, one of several Democratic leaders who are speaking out against the Trump administration's move to cut the free initiative.
"The Trump administration is actively choosing to eliminate programs that have saved taxpayers money," the governor's office said in an email. "During a time when inflation and the cost of living are already so high, programs like this should be preserved to help Americans keep more of their hard earned money.”
Officials in California and Illinois also confirmed receiving the letter.
Maura Kownacki, a spokesperson for the Illinois Department of Revenue, said the Prairie State's partnership with the IRS to offer Direct File also meant that "Illinois taxpayers could file their federal returns and be automatically connected to the state’s free income tax system, MyTax Illinois, to complete their state returns." These capabilities are now gone.
"Ending the Direct File Program is a setback for hardworking families who relied on it to file their federal returns at no cost," Kownacki tells Money.
What was the IRS Direct File program?
IRS Direct File was a federally funded free online tax filing service available to certain taxpayers in 25 states. Tested with a small group in 2024, the online tax filing program was expanded to additional states in 2025. Ultimately, about 30 million people qualified to use it.
Hundreds of thousands of taxpayers filed with Direct File in 2024 and 2025, and data shows it was growing. Nearly 300,000 taxpayers submitted tax returns that were ultimately accepted through Direct File this past tax season, up from about 141,000 the previous year.
The program's success has long been disputed. Despite its cost of over $40 million per year, Direct File's critics point out that it was only available to a limited number of taxpayers with relatively basic tax situations.
The One Big Beautiful Bill Act included appropriations for the IRS to research the replacement of Direct File and the cost of alternative options, like enhanced public-private free filing partnerships.
Once the bill became law, the Trump administration used it as license to fully cut Direct File. Billy Long, who was the IRS commissioner from June to August, said at tax summit in July, "You’ve heard of Direct File, that’s gone. Big beautiful Billy wiped that out."
"I don’t care about Direct File," he added.
How to file taxes for free without Direct File
In the absence of Direct File, taxpayers under a certain income threshold can consider Free File, a separate option to file taxes for free via IRS partnerships with tax software companies.
During the 2025 tax season, filers earning $84,000 or less could get online tax prep at no charge. Folks over the limit could make use of Free File Fillable Forms. Both programs are expected to return next year.
Andrew LePage, spokesperson for the California Franchise Tax Board (FTB), says that California "taxpayers can continue to use our longstanding CalFile service to file their California state tax return online for free directly with FTB."
Free File allows for free guided tax preparation through companies like TaxSlayer and ezTaxReturn.com. Taxpayers may have to pay fees to file state returns.
As IRS Direct File is eliminated, some advocates are arguing that the Free File option isn't enough. Hochul's office said that "the Trump administration’s decision to kill the Direct File program shows how far they’ll go to put special interests over the needs of everyday Americans." And Sen. Ron Wyden, D-Ore., said in a statement that "the only thing Trump accomplishes by doing this is stealing from working-class taxpayers to pad the profits of giant, rent-seeking tax software companies."
The IRS did not respond to Money's request for comment on the end of Direct File.
More from Money:
The IRS’s Free Direct File Program Is on the Chopping Block. What Went Wrong?
Why Millions of Taxpayers Could Get Bigger Refunds Next Year