IRS Increasing Eligibility of Its Free Tax Filing System to 24 States for the 2025 Tax Season

NTD Newsroom
By NTD Newsroom
October 4, 2024US News
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IRS Increasing Eligibility of Its Free Tax Filing System to 24 States for the 2025 Tax Season
U.S. Internal Revenue Service (IRS) tax forms on March 24, 2006. (Karen Bleier/AFP via Getty Images)

The IRS announced Thursday that it is increasing eligibility to more than 30 million taxpayers for the government’s free tax filing software, Direct File, for the 2025 tax filing season.

“By doubling the number of participating states and expanding eligibility, 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.

The IRS launched a trial run of Direct File last year in a dozen states, which allows Americans to submit simple tax returns to the government. The software displays the math to taxpayers allowing them to ensure their return is accurate, and they are getting their maximum refund, the agency said.

According to the U.S. Treasury, the average American taxpayer spends $270 and 13 hours filing their taxes. During the piloted 2024 tax filing season, over 140,000 taxpayers in 12 states used the service to file simple tax returns with W-2 wage income, Social Security income, unemployment payments and certain credits and deductions. Users said they filed their taxes in around an hour or less, according to a GSA Touchpoints survey, listed in the statement.

In addition to expanding Direct File to 24 states, the IRS noted that the service will add a wider range of tax credits for the 2025 tax season, including the Credit for the Elderly and Disabled, Child and Dependent Care Credit, Premium Tax Credit, and Retirement Savings Contributions Credit. Direct File will also allow deductions claims for Health Savings Accounts and the current educator and student loan deductions.

Taxpayers who itemize their tax returns with more than 7.5 percent of their Adjusted Gross Income on medical expenses, donated a large sum of money to charity, paid a large amount of state income tax, property tax, or mortgage interest will not be eligible to use Direct File yet.

The IRS said its goal in the future is to broaden the program’s tax scope to support more common tax situations, in particular working families.

Direct File will also improve customer service with a new chat bot that provides help on the eligibility checker, the Treasury said. The Live Chat will be available in English and Spanish with enhanced authentication and verification features to allow customer service representatives to provide more information. Users can request a callback where IRS customer service representatives can provide technical support and answer basic tax questions, Treasury said.

The Direct File system will be available next year in 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.