IRS Direct File to be available in 24 states next year

IRS Direct File — an online option for Americans to file directly with the tax agency itself using a government-fielded tool — will be available to over 30 million eligible Americans in 24 states next year at the start of the coming tax season, the IRS and Treasury Department announced Thursday.

That’s double the amount of states the program was available in last year when the IRS piloted the tool, which allows users to file their federal taxes online before moving them over to a state-side filing tool. 

Taxpayers in the following states may be eligible: Alaska, Arizona, California, Connecticut, Florida, Idaho, 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.

All of the new states have a state income tax, other than Alaska, and are putting together a state-level solution, IRS Commissioner Danny Werfel told reporters on a Thursday call. Last year, only four states in the pilot had a state income tax, he said.

The IRS says that additional states have already committed to joining the program in the 2026 filing season. 

The tax agency is also expanding the eligibility requirements for the tool.

“Direct File will cover more types of income, more credits and more deductions, so millions more can take advantage of this free filing option,” said Werfel.

Last year, the pilot only supported relatively simple tax situations. This year, the tool will offer options like premium tax credit and retirement savings contributions credit. 

The policy goal behind the tool “is that we want to build a Direct File system that allows any middle class or working class American to be able to use Direct File if they choose to,” Wally Adeyemo, deputy treasury secretary, told reporters. “We think we’ll be able to save middle class and working class Americans both money and time.”

Some Republicans on Capitol Hill don’t seem to agree. A 2025 funding proposal for the IRS from Republicans on the House Appropriations Committee would block funding for Direct File. 

The IRS, meanwhile, included a $75 million placeholder for Direct File in its 2025 budget, Werfel told reporters in May when the IRS decided to make the service permanent. 

Tax prep software companies have also pushed back against the tool, calling it costly and unnecessary.

For decades, the IRS has had a partnership with tax prep companies to offer free filing options for many taxpayers, called Free File, although that program has largely been underutilized. Many other countries offer similar tools to Direct File. 

Still, Direct File will be “one option among many” for taxpayers to choose from, including the Free File program, said Werfel. 

“One positive outcome of the Direct File pilot was increased attention on all free filing options and strong growth in taxpayers using Free File,” which was extended by five years in the spring, he said. 

Last year, over 140,000 taxpayers used Direct File. Returning users will find some new features, including a chatbot to help with the tool’s eligibility checker. The IRS has trumpeted the positive ratings for Direct File from users that completed their taxes with the tool — although some users started but never finished the process. 

“Our goal is to equal if not better that customer experience,” said Werfel. “We're very focused right now on just making sure that the product is ready on day one of the filing season. We have a lot of work to do with states to make sure that we're ready to go.”