Jan 17, 2025
Direct File, the IRS’ free tax filing program, has expanded to limited taxpayers in 25 states for 2024 returns. But the program’s future remains uncertain amid pushback from Republicans who will soon control the White House and Congress. More than 130 Democrats this week urged Trump’s picks for Treasury secretary and IRS commissioner to preserve Direct File. With the start of tax season approaching, Democratic and Republican lawmakers are split on the future of Direct File, the IRS’ free tax filing program. Direct File, which recently expanded to limited taxpayers in 25 states, processed roughly 140,000 returns in 2024 during the pilot that launched mid-season. The pilot covered simple returns in 12 states. The program has been controversial among Republicans, who have pushed to end the free filing service. The critique has raised questions about Direct File’s future, particularly under GOP control of the White House, Senate and the House of Representatives.  More from Personal Finance:Here’s how the child tax credit could change in 2025Year-end bonuses rise — but fewer workers are getting them, report findsNow is an ideal time to do a financial reset, advisor says. Here’s why During his Senate confirmation hearing on Thursday, Scott Bessent, President-elect Donald Trump‘s pick for Treasury secretary, was asked about the future of Direct File. If confirmed, “I will commit that for this tax season that Direct File will be operative,” said Bessent, without commenting on future years. Bessent’s comments come one day after more than 130 Democrats, led by Sens. Elizabeth Warren, D-Mass., and Chris Coons, D-Del., voiced support for Direct File. “Direct File is making the process of interacting with the government more efficient, a goal we all can agree on,” the Democratic lawmakers wrote in a letter to Bessent and Billy Long, Trump’s pick for IRS commissioner. The pilot program saved consumers an estimated $5.6 million in federal tax preparation fees and could save billions in the future, the Democratic lawmakers wrote. “We disagree with our colleagues who are calling on the President to pull the plug.” Rep. Adrian Smith, R-Ne., along with 27 House Republicans in December wrote a letter to Trump, urging the president-elect to end Direct File via a day-one executive order. “The program’s creation and ongoing expansion pose a threat to taxpayers’ freedom from government overreach, and its rollout and structural flaws have already come at a steep price,” the Republican lawmakers wrote.  While the program launched mid-season in 12 states last year for only simple returns, Republicans have continually pointed to the roughly 140,000 returns filed compared to total eligible filers. The cost for Direct File through the pilot was $24.6 million, the IRS reported in May 2024. Direct File operational costs were an extra $2.4 million, according to the agency. Over the past year, Republican lawmakers from both chambers have introduced legislation to halt the IRS’ free filing program. In January 2024, attorneys general from 13 states described Direct File as “unnecessary and unconstitutional” in a letter to the Treasury Department.
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