Tax prep software firms are celebrating the proposal in the House-passed bill: The end of IRS’s Direct File. This program, which IRS first piloted in 2024 and expanded this year, which allows eligible individuals to opt in, and with IRS’s help, to prepare and e-file returns at no cost, using a smartphone, laptop or other device.
140,000 filers used Direct File to file their 2023 Form 1040 in the 2024 filing season. IRS hasn’t yet released the figures for 2025, but we expect they will be higher. Advocates for keeping Direct File say it’s free, simple and saves time.
Opponents call it an IRS overstep and a failed program that wastes resources. The naysayers have the ears of Republican lawmakers in Congress.
The House bill directs IRS to end Direct File within 30 days of the bill’s enactment.
The software companies will continue to collect fees for tax software moving forward. The program hurts their bottom lines.