‘Big Beautiful Bill’ Set to Eliminate the IRS’s Free Online Tax Filing Program

As lawmakers work to cut taxes for millions of Americans, the bill they are writing will also likely eliminate a program that makes it easier and cheaper to file taxes.

Republicans’ “Big Beautiful Bill” would terminate Direct File, a free online tax filing program recently developed by the IRS. If passed, the program would end no later than 30 days after the bill is signed into law.

The House of Representatives and Senate still need to agree on a final version of the bill before it is sent to the president’s desk. However, eliminating the free tax filing service will likely be the final version of the bill, as it has survived many revisions.

Direct File will likely be replaced by a new version that is a partnership between the government and private tax preparation companies, and would be free for up to 70% of taxpayers. Congress appropriated $15 million in the budget bill for a new task force that would create this new free filing service.

What Is The IRS Direct File?

Direct File started as a pilot program during last year’s tax filing season, available only to taxpayers with relatively simple tax returns in 12 different states. The program expanded to 13 more states in 2025, and was expected to include additional states and more types of filers in the next tax season.

Republican lawmakers have criticized the filing program, arguing it is “wasteful and redundant.”

The IRS estimates it spent about $41 million on the program over the year that ended in April 2025. An estimated 30 million taxpayers in 25 states qualified for Direct File in 2025, but a little more than 311,500 Americans actually used the program.

That means the government spent about $131.61 for each person who filed their 2025 tax return through the program.

Direct File’s Concept Is Popular With Taxpayers

About three-quarters of taxpayers surveyed by the Urban Institute, a nonprofit research organization, in December 2024 said they would be somewhat or very interested in using Direct File.

Studies have found that the majority of Americans support expanding free filing options and would like to make it simpler to complete their taxes by being able to file through the IRS automatically.

If Direct File is eliminated, taxpayers who qualify will no longer be able to file a digital return directly with the IRS. If Direct File is not replaced, Americans will have to pay a third party $290 on average to file their taxes, according to the National Taxpayers Union Foundation.