Republican Budget Bill Would Officially Eliminate IRS Direct File Program

The measure would task the Treasury Department to work with the private sector to create a separate option.

A file photo of the IRS building in Washington. AP Photo/J. David Ake, File

As the House considers a budget reconciliation bill, within it is a measure to terminate the IRS’s Direct File platform.

President Donald Trump has repeatedly called on House lawmakers to pass what he called a “big, beautiful bill” that would cut spending to offset $4.5 trillion in various tax cuts. That term was included in the package’s title when it was released on May 12.

On page 370 of the 389-page measure, lawmakers propose that “as soon as practicable, and not later than 30 days after the date of the enactment of this Act, the Secretary of the Treasury shall ensure that the Internal Revenue Service Direct File program has been terminated.”

On the next page, lawmakers call for the creation of a task force to create a better public–private collaborative effort between the IRS and private tax-preparation services.

The bill would authorize the Treasury Department to use up to $15 million in funds to create a report that analyzes the cost of replacing Direct File with another service allowing about 70 percent of U.S. taxpayers to file their returns free of charge. The Treasury Department was given 90 days to complete the report and sent it to Congress.

Direct File allows certain taxpayers to prepare and file tax returns online with the IRS for free. It was rolled out as a pilot program starting in 2024. The IRS was tasked with looking into how to create such a system as part of the money it received from the Inflation Reduction Act, signed into law by President Joe Biden in 2022.

In May 2024, the agency announced that the program would be made permanent.

The IRS accepted 140,803 returns filed by taxpayers using Direct File in the 12 states where it was available last tax season. It has been expanded to include half the country this year. It is unclear how many taxpayers have used Direct File this year.

Democratic lawmakers in January asked Treasury Secretary Scott Bessent and IRS commissioner nominee Billy Long to preserve the program. They wrote in a letter that “ending Direct File would hurt everyday Americans.” Long has not yet received a Senate confirmation hearing.

“This program is efficient and effective, providing a vital service for millions of Americans, while also keeping their data safe from misuse. Congress does not need to pass legislation to continue this progress,” the lawmakers wrote.

Bessent said during his January Senate confirmation hearing that he would maintain Direct File, at least for the time being.

“I will commit that for this tax season that Direct File will be operative and the American taxpayers who choose to use it will,” Bessent told the Senate Finance Committee on Jan. 16.

Earlier this year, Trump adviser Elon Musk, a special government employee, wrote on social media that 18F, the government agency that worked on Direct File and other technology-related government programs, had been terminated.

The Associated Press contributed to this report.