Both House and Senate lawmakers are looking to end the IRS’s Direct File program, which allows taxpayers to file their taxes for free directly with the agency.
Senate Finance Committee Chairman Mike Crapo, R-Idaho, released legislative text on June 18 to be included in the budget reconciliation bill that includes a provision to end the Direct File program. The budget reconciliation bill passed by the House last month includes the same language.
Notably, the Associated Press reported in April that the Trump administration plans to eliminate the program, but Congress is looking to make it official through the so-called Big Beautiful Bill.
In addition to eliminating the Direct File program, the bill is also looking to replace the IRS Free File Program – which allows qualified taxpayers to get free tax preparation services and free electronic filing.
Specifically, the bill would appropriate $15 million in fiscal year 2026 for a task force “to design a better public-private partnership between the IRS and private sector tax preparation services to provide for free tax filing to replace the existing ‘Free File’ program and any ‘direct e-file’ tax return system.”
The IRS successfully piloted its Direct File tool during the 2024 tax season, allowing more than 140,000 taxpayers across 12 states to file their tax returns with the agency electronically. The IRS made the program permanent in May 2024.
In October 2024, the IRS announced that the Direct File tool would be available in 12 additional states for the 2025 tax season, making the free e-filing service available in a total of 24 states.
Direct File is a web-based service that works on mobile phones, laptops, tablets, or desktop computers. It guides taxpayers through a series of questions to prepare their Federal tax return step-by-step. Once taxpayers have completed their Federal tax return, the Direct File system automatically guides them to state tools to complete their state tax filings.
The Government Accountability Office published a report in December touting the success of the program, saying that Direct File received top scores from 90 percent of taxpayers who used the tool.
Despite the program’s positive reviews, this is not the first time lawmakers have tried to terminate the program. Republicans have previously asked President Donald Trump to end the Biden-era Direct File program, calling it “unauthorized and wasteful.”