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 tax season, twenty-five states will participate, though the IRS invited all states and the District of Columbia to join in.
So, the catch? Not all states have embraced Direct File, which means you cannot use the program if your state is not participating. Also, only relatively “simple” tax situations may qualify, which include income limits and limited tax breaks.
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We’ll go over the 2025 Direct File program details to see if you qualify for this free tax filing option.
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 pilot of Direct File 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 opens on January 27 (the day the IRS officially begins accepting returns), and 30 million taxpayers are expected to be eligible.
However, the option to participate comes on a state-by-state basis. This means you cannot use Direct File if you live in a nonparticipating state, the District of Columbia, or a U.S. territory. So, some states will not get the Direct File program.
What states are using Direct File?
For the 2025 tax season, 25 states are eligible to use Direct File:
- 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 is 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 dropdown 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:
| Filing Status | Income Limit (must be less than) |
| Single Filer | $200,000 in one income source ($168,600 if multiple employers) |
| Married Filing Jointly | $250,000 in combined income ($168,600 if multiple employers) AND under $200,000 for one spouse |
| Married Filing Separate | $125,000 in income |
Additionally, the 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 Direct File program 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 is $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 incomes. For tax year 2024, that’s an adjusted gross income (AGI) of $84,000 or less (for guided tax software).
Is IRS Direct File permanent?
A lot has happened in the news lately leaving some to wonder: is the IRS Direct file going away?
While incoming Treasury Secretary, Scott Bessent, has said the program will be open this tax season, in a Senate hearing he noted that he will want to “study the program” if confirmed.
Meanwhile, late last month, a letter went out to President Trump regarding an immediate end to the program. The proposal, signed by 29 GOP lawmakers, asks the new president to abolish Direct File.
With a GOP-controlled Senate and Republican President, it may remain to be seen whether the IRS Direct File program will continue in subsequent tax years. A House GOP bill aims to abolish the IRS, while Trump recently froze IRA funding (the act that supported Direct File) earlier this month.
Regardless, you may wish to shop around for different filing options this tax season and consider:
- Free IRS program MIL (if you are in the military)
- Free IRS program VITA (if you make $67,000 or less, you can meet with an IRS partner or volunteer staff who can provide tax counseling and preparation services)
- Purchased tax software from online or in-person retailers
Or, if you’d rather have a trusted tax professional, look out for any tax advisors who may help you with your tax filing this season.
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