More than 30 million Americans in nearly half the states will be able to use the federal Direct File program to file their taxes for free next year, U.S. Treasury officials announced Thursday.
Alaska, Connecticut, Idaho, Kansas, Maine, Maryland, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania and Wisconsin will join 12 states that partnered with the Internal Revenue Service’s Direct File program last year. Colorado has announced plans to join in 2026.
“Direct File has the potential to save Americans tens of millions of dollars in filing fees in the upcoming filing season,” Treasury Secretary Janet Yellen said in a statement announcing the states participating next year.
Direct File is a free online tool for people with simple tax returns, such as those who earn income from paychecks and not from capital gains or gig work. The IRS will expand the types of income, credits and deductions users can claim next year to include the child and dependent care credit and retirement savings contribution credit, among others.
Participating states last year either did not levy a state income tax or created their own free online filing tools that linked to Direct File.
Major tax preparation companies such as H&R Block and Intuit — the parent company of TurboTax — have fought for years to stop the Treasury from offering free online filing.
The IRS’s decision to expand Direct File this year “doesn’t change the fact that this program is a solution in search of a problem and every American can already file their taxes for free, without any cost to the government or taxpayers,” Intuit spokesperson Derrick Plummer told the Associated Press in May.
Some state leaders agree. Republican auditors, controllers and treasurers from 17 states, plus the Alaska Commissioner of Revenue, wrote to the Treasury in March urging the agency to shut down the program.
“Direct File will create challenges for taxpayers and state treasurers and the costs of Direct File far outweigh any potential benefits it may confer to taxpayers,” the officials wrote. They argued that users may not realize they also must file state returns.
The federal government already offers some free tax filing options. The IRS partners with software companies to offer free filing for taxpayers with an adjusted gross income of $79,000 or less, for instance. The Department of Defense has a free tax filing program for service members, veterans and their families.
H&R Block and Intuit also offer free filing, although they have a financial incentive to get users to pay. The Federal Trade Commission in January ordered Intuit to stop deceptively advertising TurboTax as “free” while funneling most users into paid products.
About half the people who used Direct File in 2024 paid to file their taxes last year, according to the IRS. The agency said the average American spends $270 to file their taxes.