US Free Tax Filing System Expands to 24 States, Benefiting 30 Million Taxpayers in 2025, by Reuters

U.S. Treasury Announces Free Federal Tax Filing for Millions

The U.S. Treasury Department has announced that over 30 million taxpayers in 24 participating states will be able to file their federal taxes for free next year through the expanded online Direct File system offered by the Internal Revenue Service.

Significance of the Initiative

The Biden administration aims to demonstrate how its policies are helping consumers save money, a central message in Vice President Kamala Harris’ campaign focused on alleviating high living costs.

According to the Treasury, the Direct File system could save taxpayers tens of millions of dollars in tax preparation fees during the 2025 filing season. The pilot version of this program, which began earlier this year, was made possible by approximately $60 billion allocated for IRS modernization through the 2022 Inflation Reduction Act.

Participation Stats

In the 2024 filing season (covering the 2023 tax year), over 140,000 taxpayers in 12 states utilized the Direct File pilot program for straightforward tax returns that included W-2 wage income and standard deductions.

Next year, the system will be available in 24 states and will accommodate tax returns with various income types, credits, and deductions, broadening the eligibility to include over 30 million taxpayers. However, individuals who itemize deductions, such as mortgage interest or other specific expenses, will not be able to use the system at this time.

The Treasury estimates that the average American taxpayer spends approximately $270 and around 13 hours preparing their tax returns.

Official Statement

Treasury Secretary Janet Yellen remarked, "By doubling the number of participating states and expanding eligibility, Direct File has the potential to save Americans tens of millions of dollars in filing fees in the upcoming filing season, advancing the Biden-Harris Administration’s goal of reducing costs for American families."

The Direct File system will be available next year in states including Alaska, Arizona, California, Connecticut, Florida, Idaho, Kansas, Maine, Maryland, Massachusetts, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, South Dakota, Tennessee, Texas, Washington, Wisconsin, and Wyoming.