NEW ORLEANS – The IRS has confirmed that its free Direct File system, used by nearly 300,000 Americans to submit their taxes online in 2025, will not return next year, a decision expected to affect thousands of Louisiana taxpayers who benefited from the program’s simplicity and zero-cost filing.
Announced by the Trump administration this week, the move ends one of the Biden-era initiatives aimed at making tax filing more affordable and accessible, particularly in lower-income states like Louisiana. The program had been praised for its convenience but faced opposition from Republican lawmakers and tax preparation companies who argued it duplicated existing services and undercut private businesses.
According to IRS data, residents in states like Louisiana, which has one of the nation’s highest poverty rates and limited access to affordable tax-preparation services, stood to benefit most from a permanent free-filing option. Nearly 40% of Louisiana tax filers qualify for the Earned Income Tax Credit, and advocates have warned that the loss of a no-cost federal filing system could increase costs for working families.
A policy analysis by the Washington, D.C.–based Institute on Taxation and Economic Policy, a research organization focused on tax fairness, estimated that expanding Direct File could have delivered between $63.4 million and $162.5 million in additional federal tax credits to Louisiana households each year.
Program Background
Developed and funded through the Inflation Reduction Act of 2022, Direct File gave taxpayers in participating states the ability to file federal returns directly with the IRS online without using third-party software or paying fees. The agency spent tens of millions of dollars on the system and launched it as a pilot during the 2024 tax season.
The Center for Taxpayer Rights later obtained an IRS report showing that 296,531 taxpayers filed accepted returns through Direct File for the 2025 season, more than double the 140,803 from its 2024 pilot year. Despite that growth, Treasury Secretary and IRS Commissioner Scott Bessent said this week that “better alternatives” exist, citing low overall adoption and asserting that private companies can handle electronic tax filing more effectively.
The program’s future became uncertain after the Trump administration began reducing federal technology initiatives and instructed IRS staff to halt work on Direct File for 2026.
Criticism and Reaction
The IRS website now confirms that Direct File is closed, with no timeline for its return. The Washington Post and NextGov first reported the news following an internal email to state comptrollers.
Critics of the decision, including Adam Ruben of the Economic Security Project, said the move favors wealthy interests at the expense of everyday taxpayers. Although the Biden administration had announced plans to make Direct File permanent last year, the system had drawn heavy opposition from commercial tax preparation companies, which profit from the roughly $140 Americans spend on average to file their taxes.
