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IRS Direct File: How It Works, Who Qualifies

Direct File, a new IRS tax filing program, is being made permanent, the Treasury Department announced on May 30. A pilot program was open to eligible filers starting in 2024.
Sabrina Parys
By Sabrina Parys 
Updated
Edited by Arielle O'Shea

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Updated on May 30, 2024.

The Internal Revenue Service (IRS) is making Direct File a permanent tax-filing option beginning in the 2025 tax season.

The decision followed a successful pilot program during the 2024 filing season that saved some 140,000 taxpayers an estimated $5.6 million in filing costs, according to the Department of the Treasury. Direct File pilot program users also received over $90 million in refunds

.

Direct File, sponsored by funding from the Inflation Reduction Act, is the IRS' first attempt to provide a free filing program comparable to existing commercial software.

While the pilot was limited to people with simple tax returns in a handful of states, the Department of the Treasury estimated that one-third of taxpayers in those states — almost 19 million people — were eligible to use the tax service this past filing season.

The IRS says it is looking to expand eligibility and plans to work with all states that want to partner with Direct File in 2025.

Direct File is currently closed for the 2024 tax filing season

Internal Revenue Service. Direct File Pilot News. Accessed Apr 19, 2024.
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What is IRS Direct File?

IRS Direct File is a tax-prep program that allowed eligible users across 12 states to file their federal income tax returns for free directly through the IRS in 2024.

Similar to commercial tax software, the Direct File service used interview-style questions to help taxpayers complete and submit their tax returns. The service was available in English and Spanish, and filers could work on their returns via mobile, tablet or computer.

The agency also provided a staff of customer service agents to help filers with technical and basic tax questions as needed. Customer service was available from 7 a.m. to 10 p.m. Eastern time, Monday through Friday

Internal Revenue Service. Join the IRS Direct File pilot. Accessed Feb 15, 2024.
. Queries that fell outside of the scope of the program were directed to other IRS customer support representatives.

» Need to back up? Learn how to file taxes

Where was Direct File available?

In 2024, the pilot program was available in 12 states: Arizona, California, Florida, Massachusetts, New Hampshire, New York, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming.

Eight of these states — Florida, New Hampshire, Nevada, South Dakota, Tennesse, Texas, Washington and Wyoming — don’t have a state income tax. (New Hampshire does tax dividends and interest, and some high earners in Washington may face a capital gains tax on sizable profits.)

» MORE: Take a closer look at the income-tax-free states

For the states that do have a state income tax — Arizona, California, Massachusetts and New York — the IRS partnered with the state to route tax filers to a state-supported filing tool once their federal return had been filed.

What were the income limits for IRS Direct File?

According to the Direct File eligibility tool, single filers with wages of $200,000 or less were eligible in 2024. If the filer had more than one employer, the threshold dropped to $160,200 or less.

Married couples filing separately were eligible if their wages were $125,000 or less. If married filing jointly, a couple's combined wages could not exceed $250,000

Internal Revenue Service. Join the IRS Direct File Pilot. Accessed Feb 15, 2024.
. There were also additional income restrictions if one spouse made over $200,000 or over $160,200 if they had more than one employer.

How to access IRS Direct File

Direct File launched in January 2024, but access to the software was staggered and limited to a test group. In March, Direct File became available to all eligible filers in participating states, with no timing or seat limitations

Internal Revenue Service. Direct File Pilot News. Accessed Mar 5, 2024.
.

The program is closed to all users as of this writing, but will reopen for the 2025 filing season.

Direct File eligibility

In its first year, the program was designed to support simple tax situations. People with more complex returns — such as business owners and freelancers — were not able to get much out of the pilot. The simple tax return requirement also excluded people who needed to take certain types of tax credits and deductions.

According to the IRS, the Direct File program supported the following in 2024:

Income

  • Social Security and railroad retirement.

  • Unemployment benefit income.

  • Interest of up to $1,500.

Credits

Deductions

How much does Direct File cost?

The IRS Direct File service is free. After completing their federal returns, filers with state return obligations were directed to their respective state’s filing service.

What’s the difference between IRS Free File and IRS Direct File?

The IRS Free File program is a partnership between the tax agency and several commercial tax software providers, such as TaxSlayer and TaxAct, that offers free filing services to taxpayers who make below a certain income. The income limit for the 2024 tax filing season is $79,000. Free File providers may add additional restrictions to services offered, such as whether state returns or certain federal credits are supported. It is available through the October extended filing deadline.

Direct File, on the other hand, is a free, IRS-run tax filing service that was first piloted in 2024 and is now set to expand in 2025. The income thresholds to qualify for Direct File are generally higher than those of the Free File program; however, Direct File is generally more limited in what tax situations it can handle. In 2024, the program was limited to only certain states, but the agency plans to work with all states that wish to participate in 2025.

» Dive deeper: Don't qualify for IRS Free File? More options for free tax filing

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