House Republicans propose ending the IRS Direct File program in favor of a public-private filing solution that could offer tax filing services to millions of Americans for free.
Key Insights
- The House budget reconciliation bill would terminate the IRS Direct File platform within 30 days of enactment
- President Trump supports the bill as part of efforts to offset $4.5 trillion in tax cuts
- A proposed task force would create partnerships between the IRS and private tax preparation companies
- The Treasury could spend up to $15 million analyzing a replacement system that would allow 70% of taxpayers to file for free
Republican Plan to Replace IRS Free File Program
House Republicans are advancing a budget reconciliation bill that would end the IRS Direct File program, a free tax filing service launched as a pilot in 2024. The bill would require termination of the platform within 30 days of the legislation becoming law. Instead of the government-run system, Republicans propose creating a task force to develop partnerships between the IRS and private tax preparation companies like TurboTax and H&R Block. This initiative aligns with President Trump’s broader agenda to reshape government services and implement tax cuts while controlling federal spending.
The legislation authorizes the Treasury Department to spend up to $15 million to analyze the costs and feasibility of replacing Direct File with a new service that would enable approximately 70 percent of U.S. taxpayers to file their returns at no cost. This approach represents a shift from direct government services to public-private partnerships, a model Republicans argue could be more efficient and cost-effective. The bill comes as President Trump has urged lawmakers to identify spending cuts to offset approximately $4.5 trillion in proposed tax cuts.
Current Status of Direct File Program
The Direct File platform was initially launched as a limited pilot program in 2024, available to taxpayers in just 12 states. During that first tax season, 140,803 returns were processed through the system. Despite its modest beginning, the IRS announced in May 2024 that Direct File would become permanent and expanded its availability to about half the country for the current tax filing season. The program was designed to provide a straightforward, government-operated alternative to commercial tax preparation software for taxpayers with relatively simple tax situations.
“I will commit that for this tax season that Direct File will be operative and the American taxpayers who choose to use it will,” said Bessent.
Treasury Secretary Scott Bessent has already committed to maintaining the Direct File system through the current tax season, regardless of the legislation’s outcome. This ensures taxpayers who have begun using the system won’t face disruption mid-season. The program’s future beyond the 2025 filing season, however, remains uncertain as the bill makes its way through Congress. The involvement of the technology agency 18F, which helped develop Direct File, has also come under scrutiny as part of broader government reform efforts.
An under the radar part of Republicans' tax plan: they're going to end the incredibly popular free direct tax filing service. Trump will force you to fork out hundreds of dollars each year to TurboTax so he can give tax breaks to billionaires. https://t.co/bzxU1BJYEn
— Ron Wyden (@RonWyden) May 14, 2025
Competing Perspectives on Tax Filing Services
The proposed elimination of Direct File has created a clear partisan divide. Democratic lawmakers have opposed the change, arguing that ending the program would disadvantage everyday Americans who benefit from the free, government-provided service. They contend that Direct File offers a secure way for taxpayers to submit their information directly to the government without involving third-party companies that might monetize user data or upsell additional services. These concerns reflect broader debates about government services versus private-sector solutions.
President Trump, who has described the reconciliation legislation as a “big, beautiful bill,” believes the public-private partnership model represents a more efficient approach to government services. This perspective aligns with broader Republican principles of limiting government size and encouraging private sector solutions. The bill represents an early policy initiative of Trump’s second administration, signaling a return to tax and fiscal policies that emphasize private sector involvement in traditionally government-operated services while seeking to reduce federal spending across numerous agencies.
