The Internal Revenue Service will not offer its Direct File program for the 2026 tax filing season, agency officials confirmed this week, marking the end of a free electronic filing option developed under the previous administration.
An email sent Monday from IRS official Cynthia Noe to state comptrollers participating in the program stated that IRS Direct File will not be available in Filing Season 2026. No launch date has been set for the future. The announcement follows months of uncertainty since the change in presidential administrations.
The program, which allowed eligible taxpayers to file federal returns directly with the IRS at no cost, launched as a pilot in 2024. It expanded in 2025 after positive user feedback on its simplicity and speed. Users reported completing returns in under an hour, often without needing additional software or paid assistance. The system handled forms for wages, unemployment compensation, Social Security retirement income and credits such as the Earned Income Tax Credit and Child Tax Credit.
Despite its growth, Direct File drew opposition from Republican lawmakers and the commercial tax preparation industry. Critics argued it duplicated existing free filing options, like those from Volunteer Income Tax Assistance sites or certain software providers offering basic returns without charge. However, those alternatives often require in-person visits or navigation through complex eligibility rules, leading some users to opt for paid services instead.
Private companies, including major players in tax software, have long dominated the market. The industry generates billions annually from fees averaging $140 per return for Americans using commercial products. Lobbying efforts by these firms, totaling millions in recent years, targeted Congress to limit federal competition. Lawmakers echoed concerns that Direct File represented inefficient use of taxpayer funds, especially as the IRS Modernization and Infrastructure Act provisions funded its development.
Treasury Secretary Scott Bessent, serving concurrently as IRS commissioner, addressed the decision during a White House briefing Wednesday. He described Direct File as underutilized and pointed to private sector capabilities as superior alternatives. “It wasn’t used very much,” Bessent said. “And we think that the private sector can do a better job.”
Usage data supports a mixed picture. A recent IRS evaluation, obtained through a Freedom of Information Act request by the Center for Taxpayer Rights, showed 296,531 accepted returns filed via Direct File during the 2025 tax season. This marked more than a doubling from the 140,803 returns in 2024, indicating steady adoption among early adopters in 12 participating states: Arizona, California, Connecticut, Florida, Illinois, Maryland, Massachusetts, Nevada, New York, Oregon, Texas and Washington.
The program’s origins trace to the Inflation Reduction Act of 2022, a $740 billion measure signed by President Joe Biden that allocated $80 billion to the IRS for enforcement, customer service and technology upgrades. Congress directed the agency to study a direct e-filing system, prompting the pilot launch. By May 2025, under the Biden administration, the IRS declared Direct File permanent, citing cost savings for users and reduced reliance on intermediaries.
Implementation involved partnerships with state tax agencies for seamless state return integration. Taxpayers accessed the platform through IRS.gov, entering data via guided prompts similar to commercial tools but without upsell prompts or data-sharing with advertisers. Eligibility covered about 90% of filers with straightforward situations, excluding those with businesses, rental income or itemized deductions beyond basics.
The Trump administration’s review began immediately upon taking office in January 2025. Reports from The Associated Press in April indicated plans to phase out the program amid broader efficiency drives led by the Department of Government Efficiency, co-chaired by Elon Musk. IRS staff dedicated to Direct File development received directives to halt work for the 2026 season, redirecting resources to core operations like audit backlogs and phone support.
As of Wednesday, the Direct File website displays a notice: “Direct File is closed. More information will be available at a later date.” The closure aligns with fiscal priorities emphasizing reduced federal spending. The Inflation Reduction Act’s funding faced partial clawbacks in 2025 appropriations, trimming the IRS budget by $20 billion and prompting shifts away from expansionary projects.
Advocacy groups expressed disappointment but little surprise. Adam Ruben, vice president at the Economic Security Project, a nonprofit focused on economic policy, stated, “it’s not surprising” that the program was eliminated. “Trump’s billionaire friends get favors while honest, hardworking Americans will pay more to file their taxes,” he said.
The decision reverberates for the estimated 100 million Americans who file electronically each year. Without Direct File, options revert to Free File — a public-private partnership offering free software for those earning under $79,000 — or paid services from firms like Intuit’s TurboTax and H&R Block. Studies from the Treasury Inspector General for Tax Administration have noted barriers in Free File, including aggressive marketing tactics that steer users toward paid upgrades.
Historically, federal efforts at direct filing date to the 1998 IRS Restructuring and Reform Act, which mandated exploration of e-filing but deferred to industry partnerships. Direct File represented a rare challenge to that model, testing whether government could deliver user-friendly services without profit motives. Its brief run provided data on digital divides: Adoption was highest among younger filers and urban residents, lower in rural areas with limited broadband.
Looking ahead, the IRS plans to maintain focus on foundational improvements, such as expanding online account access for transcript requests and payment plans. Any revival of Direct File would require congressional approval and budget allocation, unlikely in the current environment. For 2026 filers, the agency urges early preparation through my.irs.gov, where tools for estimating refunds and tracking status remain available.
The episode underscores ongoing tensions in tax administration, where innovation clashes with entrenched interests. As filing season approaches in January 2026, millions will navigate choices shaped by this pivot, potentially increasing costs for basic compliance.