IRS Expands Free Direct File Program to 24 States

The IRS has announced a significant expansion of its Direct File system, allowing over 30 million taxpayers in 24 states to file their federal taxes online for free starting in the 2025 tax season. This initiative, part of the Inflation Reduction Act, aims to reduce the financial burden on taxpayers, who typically spend an average of $270 and 13 hours preparing their returns. Eligible states include Alaska, California, Florida, and New York, among others, representing 62% of the U.S. population. The system will also cover a wider array of income types, credits, and deductions, while maintaining a focus on accuracy to ensure correct tax filings. Treasury Secretary Janet Yellen emphasized the program's potential to save taxpayers tens of millions in filing fees, aligning with the Biden administration's goal of lowering living costs. Although currently limited to simple tax situations, more states are expected to join the initiative in future tax seasons.