IRS Direct File 2025: What You Need to Know

You may have heard of a free tax return service with the IRS. But what is it?

IRS Direct File launched last year as a way to file your taxes with the federal tax agency, for free. At the time, there were only 12 participating pilot states. This past tax season, twenty-five states participated, with an estimated 30 million taxpayers eligible to use the service.

So, what's changed? Well, under a proposed U.S. House of Representatives GOP tax plan, this free program could end as early as December 31, 2025. That means that this might be the last year for taxpayers to take advantage of this relatively new free tax filing program.

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We’ll go over the 2025 Direct File program details to see how long you may qualify for this free tax filing option, and the proposed timeline for potential retirement.

What is IRS Direct File?

Direct File began last year as a way for taxpayers to file for free directly with the IRS. This was after the tax agency found many filers would be interested in such a program. The funding came from the Inflation Reduction Act (IRA) under the Biden administration.

Last year’s Direct File pilot proved a success across 12 participating states with over 140,000 taxpayers. Most reported their experience with the program as “Excellent” or “Above Average.”

This year, the program opened on January 27 (the day the IRS officially began accepting returns), and 30 million taxpayers were expected to be eligible.)

However, the option to participate comes on a state-by-state basis. That means you couldn't use Direct File if you lived in a nonparticipating state, the District of Columbia, or a U.S. territory. So, some states didn't get the program.

What states are using Direct File?

For the 2025 tax season (returns you likely already filed in April unless you have a valid extension) 25 states are eligible to use Direct File until the October 15, 2025, deadline.

if you were granted a federal tax deadline extension (state deadlines may differ).

• Alaska, Arizona, California
• Connecticut, Florida, Idaho
• Illinois, Kansas, Maine
• Maryland, Massachusetts, Nevada
• New Hampshire, New Jersey, New Mexico
• New York, North Carolina, Oregon
• Pennsylvania, South Dakota, Tennessee
• Texas, Washington, Wisconsin, and Wyoming

Note: Colorado was expected to use the free filing service in 2026 (if the program continues beyond this tax season — more on that later).

In Direct File, each state has a drop-down arrow. You can click on it for additional information about whether the tool is the best choice for you.

For instance, according to the information provided, when you select Arizona, residents of the Grand Canyon State who are married and file separately might not want to use Direct File. (Arizona is a community property state, and filing separately requires reporting half of the community income from all sources, plus any separate income.) That situation might make Direct File less suitable for residents with that filing status.

Another example: When you select New York in the dropdown, you'll find that New Yorkers using a 529 plan might want to use a different tax preparation service. (New York allows taxpayers to deposit all or a portion of their tax refund directly into a 529.) That nuance might make Direct File less beneficial to those taxpayers.

These are just some examples; check the IRS tool for your state's specific return eligibility requirements.

How does Direct File work?

If you’ve ever used paid tax software, the IRS Direct File operates similarly.

• First, go to the Direct File webpage.
• You will be asked several questions to help prepare and file your tax return (you can also import your tax data from your IRS account, such as information from your Form W-2).
• After completing your federal return, you’ll be directed to your state’s filing website via a companion service to complete your state tax return, if eligible. (Note: this part is not directly with the IRS).

The tax service is compatible with mobile phones, laptops, tablets, and desktop computers. One of the providers offers services in Spanish.

What is the maximum income for Direct File?

There are several eligibility limits you must meet to qualify for Direct File. Your income must be:

Additionally, Direct File is limited by the types of income the tool can accept.

Commonly accepted incomes include: W-2s, Social Security, unemployment benefits, interest income, and HSA distributions.

Also, if you have income types that fall outside of that, like distributions from 401(k)s, pensions, annuities, or IRAs, you cannot use Direct File.

IRS Direct File tax credits and deductions

The IRS says Direct File is for “simple tax situations.” So you may not be able to take every tax deduction and tax credit.

However, below are several tax credits you can claim in the Direct File tool (assuming you meet eligibility requirements):

• Earned Income Tax Credit (EITC)
• Child tax credit (CTC)
• Child and dependent care credit
• Premium tax credit
• Saver’s credit

Note: For a complete list of tax deductions and credits the system can handle, visit the IRS Direct File website.

You can also take the standard deduction, which for tax year 2024 was $29,200 for married filing jointly ($14,600 for single filers).

According to the IRS, “About 9 out of 10 taxpayers take the standard deduction when filing their federal taxes.”

However, Direct File does not allow itemized deductions. So if you’re one of the 10% of taxpayers who itemize, you may want to look into other ways to file your taxes for free.

IRS Free File vs. Direct File: What’s the difference?

While they may have similar names, the IRS Free File program differs from the IRS Direct File program. Free File partners with private-sector companies to offer free tax filing services, but some providers charge for state tax returns.

Direct File has free state returns with participating states and directly files with the IRS, but not all states have chosen to participate.

Additionally, both programs have unique eligibility requirements. Free File is generally for taxpayers with lower- to middle-income. For tax year 2024, that’s an adjusted gross income (AGI) of $84,000 or less (for guided tax software).

However, despite their differences, the proposed House GOP tax plan is also looking to end Free File. For more information, read Kiplinger's report IRS Free File Could Go Away Under House Plan.

GOP House Plan: Is IRS Direct File going away?

A lot has happened in the news lately, leaving some to wonder: Is the IRS Direct file going away?

A new provision in the latest House tax plan, the "One Big, Beautiful Bill Act," looks to end the Direct File and Free File programs.

Under the new tax plan, the House seeks to establish a "public-private partnership between the IRS and private sector tax preparation services." If that sounds familiar, it is: Free File already partners with private sector companies.

Direct File was established to address the limitations of Free File, like income limits and differing tax situations. While combining Free File and Direct File into one program may sound more streamlined, some are concerned that the call for elimination is mainly due to Direct File's competition with commercial tax preparation software, like H&R Block and TurboTax.

Although the Republican-led House passed its version of the bill, the proposed legislation is expected to face revisions in the U.S. Senate. Stay tuned.

Read More

• Ready to File Taxes? What to Do
• A Bunch of IRS Tax Deductions and Credits to Know
• Why Digitizing Your Tax Records Can Simplify Your Filing