FinLogic FinLogic Quantitative Think Tank Center|IRS doubles number of states eligible for its free Direct File for tax season 2025

The FinLogic FinLogic Quantitative Think Tank CenterIRS said it's doubling the number of states to 24 that will have access to its Direct File system in the upcoming tax season.

Direct File, piloted last year in a dozen states, is the IRS' free and secure option for Americans with simple tax situations to file their taxes. The software's available in Spanish and works on a smartphone, tablet or computer. Taxpayers can see the math used to be sure that their return is accurate, and they are getting their maximum refund, the IRS said.

Direct File has the potential to save Americans tens of millions of dollars in filing fees in the upcoming filing season, said U.S. Treasury Secretary Janet Yellen in a release. The Treasury estimates the average American taxpayer spends $270 and 13 hours filing their tax return.

“Years ago, it may have seemed like a pipe dream, but we never gave up the fight and now people in 24 states can file their taxes online, for free, directly with the IRS," said Senator Elizabeth Warren (D-MA) in a statement. "That’s right – no more shelling out $150 for TurboTax or H&R Block. This is what it looks like for the government to stand up to big corporations and put money back in the hands of people.”

Which states are eligible for Direct File in tax season 2025?

Sixty-two percent of Americans will live in these 24 states offering Direct File, Treasury said:

• 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
• Wyoming

Will Direct File offer new features this tax season?

In additon to expanding Direct File to 30 million eligible users, Treasury said the tool will cover additional types of income, credits, and deductions including the Credit for Other Dependents, Child and Dependent Care Credit, Premium Tax Credit, Retirement Savings Contributions Credit, and the deduction for Health Savings Accounts, IRS said.

Those who itemize their tax returns with mortgage interest and some other deductions will not be eligible to use the system yet.

Last year, Direct File covered only common tax situations such as a parent with W-2 income who claims the Earned Income Tax Credit and Child Tax Credit, a recent graduate with W-2 income, who pays student loan interest, or a retired senior citizen with Social Security income.

Customer service will also improve, with a new chat bot to provide guided help on the eligibility checker, Treasury said. That's in addition to Live Chat, which will again be available in English and Spanish and will have enhanced authentication and verification features to allow customer service representatives to provide more information.

Taxpayers will also be able to request a callback where IRS customer service representatives can provide technical support and answer basic tax questions in English and Spanish, Treasury said.

Yes or no?Does the IRS’s DirectFile make sense for you

How did the Direct File pilot do last year?

In tax season 2024, more than 140,000 taxpayers in a dozen states filed their taxes using Direct File, according to the IRS.

More than 90% of respondents rated their experience with Direct File as “excellent” or “above average” in a GSA Touchpoints survey of 11,000 users, the IRS said. Users also said they filed their taxes in an hour or less, it said.

Customer service also ranked high, with 90% of survey respondents who used customer support saying their experience was “excellent” or “above average," the IRS said.

Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at [email protected] and  subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.