**IRS Expands Free Direct File Tax Program to 30 Million People in 2025**

The Internal Revenue Service (IRS) is broadening its program that allows taxpayers to file their returns directly with the agency at no cost. This Direct File initiative, which enables individuals to calculate and submit their tax returns without relying on commercial tax preparation software, will extend its reach to over 30 million people across 24 states for the 2025 filing season. Initially launched as a pilot project during the 2024 tax season, the program was limited to residents in 12 states.

IRS Commissioner Daniel Werfel confirmed that the program will not only become permanent but also significantly increase the eligibility criteria for taxpayers. "We're announcing significant expansions of Direct File that will make the service available to millions more taxpayers in 2025," Werfel stated during a call with reporters. He also noted the potential for additional states to join the initiative in 2025.

The 2024 pilot program was exclusive to individuals with straightforward W-2 forms and allowed users to submit their returns directly to the IRS. During its inaugural run, the program facilitated claims totaling over $90 million in refunds. Initially available in states such as California, New York, Arizona, and others, the expanded list for 2025 will include Alaska, Connecticut, Idaho, and several more.

Additionally, the new eligibility standards set for 2025 will allow participation from taxpayers with 1099 income along with those benefiting from credits such as the Child and Dependent Care Credit, Retirement Savings Contributions Credit, and the deduction for Health Savings Accounts.

Treasury Deputy Secretary Wally Adeyemo highlighted that many other countries, including Germany and Japan within the Organization for Economic Cooperation and Development, have been offering similar services for years with prepopulated tax forms.

The initiative hasn't been warmly received by commercial tax preparation software companies, which have long profited from their products. An IRS inspector general report recently criticized the agency for inadequate data protection measures related to the IRS Free File Alliance, a separate pact between the IRS and commercial tax prep companies offering free services to low and middle-income taxpayers.

Mandated by the Inflation Reduction Act signed by President Joe Biden in 2022, the IRS was given a $15 million budget and nine months to explore the development of a direct file system. As the IRS takes strides to modernize and simplify the tax filing process, millions more taxpayers are set to benefit from these expanded services come 2025.