The Internal Revenue Service (IRS) has officially suspended its free online tax filing service Direct File after the program came under fire by Republicans and the Trump administration.
Direct File was available on mobile devices and desktop computers, and it guided taxpayers through a series of questions to prepare their federal tax returns step-by-step. Once their federal tax return was completed, the system automatically guided taxpayers to state tools to complete their state tax filings.
In a statement Thursday, Rep. Jason Smith, R-Mo., said the program was recently suspended. He noted that the IRS is instead working to create IRS-affiliated free tax preparation programs and enhance its public-private partnership, Free File, to provide free tax filing at the agency.
“American workers and families deserve a tax filing system that meets their needs and will help them see the benefits of the working families tax cuts Congress passed earlier this year, including no tax on tips, no tax on overtime, and no tax on Social Security,” Smith said.
Smith pointed to a Treasury Department report published last month that suggested the IRS halt its offering of Direct File and instead invest its resources into other free programs like Free File. That report cited high costs and limited participation as reasons to stop offering the program.
The program was launched in 2024 for the 2023 tax season and was primarily geared toward low- and middle-income taxpayers in a dozen states. The pilot successfully allowed more than 140,000 taxpayers to file their taxes online and was made permanent in May 2024.
In October 2024, the IRS made Direct File available to an additional 12 states for the 2025 tax season.
In a statement, Sen. Ron Wyden, D-Ore., who serves as ranking member of the Senate Finance Committee, slammed the decision to cut the program as an effort to benefit large corporations and remove protections for taxpayers who had fallen victim to deceptive practices by private tax preparation companies.
“I wrote the bill that created Direct File because the existing free options were insufficient and the big tax prep companies had been caught red-handed using deceptive practices to scam taxpayers into overpaying,” Wyden said. “The lesson is, the Trump administration is a threat to any public service that saves Americans time, hassle and money.”
The suspension of Direct File is unsurprising after the “Big Beautiful Bill” signed into law by President Donald Trump this summer directed the IRS to determine what to replace the free tax filing program with.
Before that, bicameral lawmakers attempted to eliminate the program entirely through the spending bill, though that attempt also included provisions to eliminate the Free File program. It instead proposed $15 million in fiscal year 2026 to create a task force to create a new public-private partnership to provide free online tax filing services.
In a post to X, Sen. Marsha Blackburn, R-Tenn., praised the Trump administration’s decision to eliminate the program, saying that Direct File “supersized the IRS and allowed it to snoop on Americans’ bank accounts.”
Despite the program’s criticisms, it overall received positive reviews. Notably, the Government Accountability Office said in a December report that Direct File received top scores from 90% of taxpayers who used the tool.
The IRS said in 2024 that Direct File users in the 12 pilot states were able to claim more than $90 million in refunds and saved $5.6 million in tax preparation fees, saying that “usage was robust.”