The IRS Direct File program—a free government-run tax filing service—may soon be terminated if a new Trump-supported budget reconciliation bill becomes law.
Trump-backed bill calls for fast termination
The House Republicans’ 2025 budget package includes a clause requiring the Treasury Department to end the Direct File program “as soon as practicable,” but no later than 30 days after the bill is signed.
The proposal is part of a broader budget plan that aims to cut at least $880 billion in federal spending, with major reductions targeting Medicaid. The bill is designed to offset the costs of extending $4.5 trillion in tax cuts championed by former President Donald Trump.
What is Direct File?
Launched as a pilot in 2024 and expanded to 25 states in 2025, Direct File allowed taxpayers to submit returns directly to the IRS online, without paying third-party services. Over 140,000 taxpayers used the system in its first year, and early reports suggest usage at least doubled in 2025.
The program was widely praised by users—more than 90% rated it as excellent or above average, according to internal reviews.
Supporters argue it saved Americans time and money. The average U.S. taxpayer spends $160 annually on tax prep; expanding Direct File nationwide could save taxpayers up to $23 billion, according to the Economic Security Project.
Why the program is under threat
Critics—mostly from the private tax preparation industry—say the IRS should not compete with commercial software. The Trump administration echoed these sentiments, pushing for a new public-private partnership to replace Direct File.
The proposed bill allocates $15 million in unobligated Treasury funds to study alternatives. The report would assess:
- The cost of a new platform
- Taxpayer opinions on public vs. private filing services
- Advertising needs for the replacement platform
- Strategies to offer free filing to at least 70% of taxpayers
The Treasury Department has 90 days from the bill’s passage to deliver this analysis to Congress.
Program supporters push back
Amy Paris, a former U.S. Digital Service member and Direct File product manager, defended the platform:
“If we designed every government service like Direct File—in plain language and built around the user—we could rebuild trust in government.”
Program staff and supporting agencies have already faced cuts. The Trump administration shut down 18F at GSA and downsized the U.S. Digital Service, now operating as “U.S. DOGE Service.”
What happens next?
While Treasury Secretary Scott Bessent confirmed that Direct File will remain active for the current filing season, its long-term future is in jeopardy. The bill is still moving through the legislative process, with markup hearings underway in the House Ways and Means Committee.
If signed into law, taxpayers could see the free IRS filing option disappear as early as summer 2025.
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