Updated, Jan. 10, 2025: In announcing the start of the 2025 tax filing season today, the Internal Revenue Service also noted that another state, Illinois, has joined Direct File. This brings to 25 the number of participating jurisdictions, more than double those during the 2024 pilot program.
Four more states — Alaska, Idaho, Illinois, and Kansas — will join the Internal Revenue Service’s Direct File next tax season.
They join Connecticut, Maine, Maryland, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania, and Wisconsin, who earlier this year joined the IRS-created-and-operated free online tax preparation and e-filing program.
These 13 new Direct File states will more than double the states where Direct File will be available. A dozen — Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington, and Wyoming — were part of the Direct File pilot for the 2024 filing season.
Treasury said that the new additions mean that more than 30 million taxpayers next year will be eligible to use the IRS’ tax prep and e-filing program. You can see the number of eligible taxpayers in each state at the ol’ blog’s Direct File 2025 Participating States page.
“Direct File has the potential to save Americans tens of millions of dollars in filing fees in the upcoming filing season,” said Treasury Secretary Janet Yellen. “As filing season approaches, taxpayers in the 24 participating states should check their eligibility for this free and easy tool to see if it’s the right option for them.”
Added credit claims: But the increase in potential filers wasn’t the only Direct File news.
In addition to the new state participants, the U.S. Treasury and IRS also said that there will be more Direct File options next year, making the program more appealing to additional filers.
During this year’s pilot program, taxpayers claiming the Earned Income Tax Credit, Child Tax Credit, and Credit for Other Dependents could use Direct File.
Those credits will still be part of the Direct File choices in 2025. Plus, next year it also will cover taxpayers claiming the Child and Dependent Care Credit, Premium Tax Credit that helps cover Affordable Care Act insurance costs, Credit for the Elderly and Disabled, and Retirement Savings Contribution Credit.
Deduction additions, too: As in 2024, Direct File next year will available to taxpayers who claim the standard deduction, as well as the above-the-line deductions for student loan interest and educator expenses.
But a new tax break will join those in 2025, when Direct File also will support taxpayers claiming deductions for Health Savings Accounts (HSA).
Treasury and IRS plan to continue the gradual filing option add-ons like those announced today in coming tax years. They are aiming to expand Direct File’s scope to support most common tax situations.
“We’re excited about the improvements to Direct File and the millions more taxpayers who will be eligible to use the service this year,” said IRS Commissioner Danny Werfel. “Above all, our goal is to improve the experience of tax filing itself and help taxpayers meet their obligations quickly and easily. Direct File will be a critical part of achieving that goal as we expand and improve the service.”
New 2025 Direct File features: When introduced, Direct File users could access the tax prep and filing program on mobile phones, laptops, tablets, or desktop computers.
As with most commercial tax software programs, Direct File users answer a series of questions to prepare their federal tax return step-by-step. That was facilitated by a live chat feature in English and Spanish that connected taxpayers with IRS customer service representatives.
For the 2025 filing season, the IRS said Direct File will include new features to make filing taxes quicker and easier.
The bilingual live chat will again be available next year, but users also will be able to try a new chat bot to help guide them through the eligibility checker. Users also can opt into additional authentication and verification, which will allow customer service representatives to provide more information.
State tax integration: While Direct File is for federal individual income tax returns, it was created to be used by taxpayers who live in states with income taxes. Half of the dozen state participants in the pilot collect some type of tax from their residents. So do many of the states joining in 2025.
Those taxpayers who also must file a state income tax return are guided once they finish their federal returns to state tools to complete their state filings.
“User experience, both within the Direct File tool and the integration with state tax systems, will continue to be the foundation for Direct File moving forward,” Werfel said. “We will focus, first and foremost, on continuing to get it right. Accuracy and comprehensive tax credit uptake will be paramount concerns to ensure taxpayers file a correct return and get the refund to which they’re entitled.”
One of many filing options: Since the IRS announced in May that Direct File would be a permanent tax-filing option, it has faced opposition from some Republican lawmakers. Those members of Congress say the IRS should spend its time and money on improving other tax agency services, and leave tax software to the private sector.
However, Werfel has emphasized that Direct File is part of the IRS’ modernization effort. And the IRS commissioner notes that it is just one option electronic filing option among many from which taxpayers can choose.
Tax preparers and commercial software providers continue to be critical partners with the IRS in delivering a successful tax system for the nation, he said.
In addition, the IRS will continue its partnership with the Free File Alliance in making the Free File’s participating commercial software programs available to taxpayers who meet income eligibility requirements. This spring, the IRS signed a five-year extension of the two-decade-old Free File program.
The Free File deal was prompted by increased use of the program. IRS attributed that to the Direct File pilot, which focused attention on all free filing options.
Certain taxpayers also can get no- or low-cost in-person tax filing help from Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs, which utilize IRS-trained volunteers. Those programs also saw increased usage and interest last year, said the IRS.
“Direct File is an important component of a stronger, more comprehensive tax system that gives taxpayers electronic filing options that best suit their needs,” Werfel said. “It is a critical tool in the IRS’ effort to meet taxpayers where they are, give them options to interact with us in ways that work for them and help them meet their tax obligations as easily and quickly as possible.”
You also might find these items of interest:
- 6 family-friendly tax credits
- Directory of state tax departments
- Tax-saving HSA & HRA contribution limits go up in 2025
- 8 reasons to file a federal tax return, even if the IRS doesn't require it
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