IRS plans to make its free tax filing program permanent

Washington CNN —

The Internal Revenue Service said Thursday that it will continue and expand its free tax filing program in 2025.

A pilot version of the online program, known as Direct File, launched earlier this year. It provides step-by-step guidance to taxpayers filing their federal tax returns.

Direct File was available to people with certain simple tax returns in 12 states during the 2024 tax filing season. More than 140,000 people successfully filed their federal tax returns using Direct File, exceeding the agency’s expectations.

Next year, the IRS plans to allow some taxpayers in all states and Washington, DC, to use the program, though not all states may choose to participate.

The Biden administration is touting the pilot program – which was funded by the Democrat-backed Inflation Reduction Act – as a win. The legislation, which passed in 2022, provided the IRS with a massive, 10-year investment meant to modernize taxpayer services and crack down on wealthy tax cheats. Republicans, concerned that small businesses and the middle class could be targeted by IRS auditors, have made several efforts to chip away at the agency’s funding.

“President Biden is committed to saving Americans time and money and ensuring families receive the tax benefits they’re owed,” Treasury Secretary Janet Yellen said on a call with reporters Thursday.

“After a successful pilot, we are making Direct File permanent and inviting all 50 states to offer this free filing option to their residents,” she said.

The pilot program has cost nearly $32 million so far. About $75 million has been budgeted for Direct File during fiscal year 2025, though the cost will depend on how many people ultimately use the program.

The IRS said it