IRS Suspends Direct File Program; Texas Participated in Multi-State Pilot

Published: Nov 14, 2025

The IRS is suspending its Direct File tool after low participation and high costs, despite positive user feedback. Texas was one of 25 pilot states. The IRS will now focus on strengthening the Free File program with private software partners.

The U.S. Treasury has announced that the IRS will suspend its Direct File tool — a free online tax-filing option piloted in 25 states, including Texas. The decision was outlined in a report to Congress dated Oct. 2 and released in early November.

Despite strong satisfaction from taxpayers who used the tool, participation was significantly lower than projected. The report also cited high operational costs (estimated at $41 million for the 2024 filing season) and increased administrative burdens for the federal government as key factors in discontinuing the program.

With Direct File not returning for the 2026 filing season, the IRS will now shift its focus to strengthening the long-standing Free File program through partnerships with private tax software providers.

Members with questions are encouraged to contact AICPA’s Melanie Lauridsen at melanie.lauridsen@aicpa-cima.com

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