Trump administration will reportedly kill IRS’ popular free tax return program

An Internal Revenue Service program allowing taxpayers to directly file their returns online for free was available to millions of Americans residing in 25 states in 2025. Now President Donald Trump’s administration plans to kill the program after this year, according to an April 17 report by the Associated Press.

Created under President Joe Biden’s administration through the 2022 Inflation Reduction Act, the free Direct File system enables up to 30 million taxpayers to automatically import earnings data from IRS records and to file federal and state tax returns at no charge. 

Before, individuals had to gather all of that data themselves. Most people who filed online used private for-profit services like TurboTax and H&R Block, which charge fees. While those companies participated in a program that allowed lower-income taxpayers to compute and file their federal returns for free, that program was used only by about 2% of taxpayers.

Direct File is available to almost all taxpayers in participating states who earn $200,000 or less annually.

The AP reported that IRS employees were instructed in March to cease preparing Direct File for next year’s tax filing season.

Many low-income individuals are not required to file returns at all, but miss out on tax refunds they are owed when they don’t. By making the process quick and free, the program was expected to enable those taxpayers to automatically access those refunds. 

The Direct File program was expected to save taxpayers $11 billion each year on tax preparation costs, spare them hours of tax preparation time, and help lower-income families take advantage of about $12 billion in unclaimed tax credits, according to a March 2024 analysis by the progressive nonprofit Economic Security Project.

Michigan is not one of the states that opted in to the program for 2025. If the state joined and Direct File were allowed to continue operations, the analysis predicted, taxpayers would save an estimated $578 million each year through the program: $241 million on tax filing fees, $90 million in time costs for filing, and about $247 million in unclaimed credits. The Michigan Department of Treasury said in October that it had not determined whether to join for the 2026 filing season.

The IRS operated a Direct File pilot in 2024. According to a David Binder Research survey, 74% of participants recommended it over competing filing options.

The program has drawn strong opposition from the tax preparation industry, which stands to lose customers if they can file directly for free. Its Republican allies in Congress have urged the Trump administration to scrap the program, calling it wasteful. In a December 2024 letter, 29 House Republicans cited debunked claims dating back to the Obama administration that the IRS targeted Republicans’ political opponents, asking, “How can we entrust the IRS to responsibly prepare and enforce taxes when it has encroached on Americans’ individual liberties at every opportunity?” Several GOP lawmakers introduced legislation last year to prohibit the IRS from operating Direct File.

The Treasury Department and the IRS did not immediately respond to requests for comment.

“Despite the swirling confusion and an intentional plan to cause chaos, Direct File is open and remains a simple, secure, and always free way for folks with simple tax situations across 25 states to file their taxes,” Economic Security Project vice president of campaigns and political strategy Adam Ruben said in an emailed statement in February. “The tool itself is maintained and improved by software developers housed in the IRS with the goal to make tax filing simpler. Thanks to Direct File, millions more Americans can complete their taxes with ease, many of whom will receive hundreds — even thousands — in tax credits like the Earned Income Tax Credit and Child Tax Credit that they spend on their families.”

“It is an outrage to see everyday taxpayers play no role in this decision,” Ruben told the AP on April 17. “Cutting costs and saving money for families were just empty campaign promises.”