The average taxpayer spends almost $160 filing their taxes, according to a 2024 IRS report. That’s about half a month of groceries for the average Illinois resident.
The agency said that’s a problem and started the IRS Direct File program to offer free federal tax filing — its answer to private and for-profit tax preparation companies like TurboTax maker In and H&R Block.
Direct File started last year with 12 participating states and is now in 25 states, including Illinois. But Republicans and the Trump administration have questioned whether the federal agency should offer Direct File and have floated plans to ax the program.
Recently confirmed Treasury Secretary Scott Bessent has said the program is safe this tax season and that he will “consult and study the program.” It’s unclear if Direct File will be available in 2026.
Adam Ruben, vice president of campaigns and political strategy at the Economic Security Project, said sometimes private services aren’t as good as promised, evidenced by lawsuits that have found certain advertising methods by some large tax prep services to be misleading and, at times, predatory.
“The legal cases against them show that many of the people who have clicked on ads in the past for free tax filing got a bait and switch,” Ruben said. “The existence of truly free tax filing is creating competition, and you’re seeing those companies take notice. And I think that’s a good thing for taxpayers.”
Many tax prep services, especially industry leaders like H&R Block and Intuit, have since cleaned up their act to get closer to offering truly free options.
Ruben said Direct File is not yet meant to be “better” than these options but “another option” that’s free and simple to use.
Free filing services
Intuit’s TurboTax and H&R Block offer free online filing services for simple returns. TurboTax lets taxpayers file a Form 1040, but they can’t itemize or file full Schedules 1, 2 or 3, which are forms to report additional income and taxes such as gambling wins, self-employment tax and alimony. H&R Block allows limited Schedules 1, 2 and 3 including the Form 1040.
Separate from Direct File, is the IRS Free File program that allows consumers to file free tax returns with partner companies who establish their “own eligibility criteria based on age, income, state residency and military status,” according to the IRS. The program is a public-private partnership between the IRS and the Free File Alliance, a coalition of tax prep software companies.
Taxpayers with an adjusted gross income of $84,000 or less in 2024 can find an IRS Free File provider through IRS.gov.
Richard Kaplan, a tax policy expert and professor at the University of Illinois Urbana-Champaign, has previously said 60 other countries already have a system like Direct File.
“It’s a reasonable proposition that this kind of critical interaction with the government, namely, filing your taxes, should be something the government makes easier, if not make available completely without charge,” Kaplan said.
Direct File’s initial success as the IRS free tax service
Direct File, like other private options, is for simple returns. Filers with other types of income such as tips, alimony or gig work income cannot use the program.
Eligible taxpayers are those who make under $200,000 or couples filing jointly who make less than $250,000 combined. However, married couples filing jointly with a spouse that makes more than $200,000 would be ineligible.
Kaplan said it’s good the IRS “started small,” dipping its toes into the tax prep pool.
While Direct File cannot handle itemized deductions, Kaplan said the impact would be minimal.
“Under the Trump Tax Cuts and Jobs Act [of 2017], when they expanded the standard deduction, that shrank the number of people who itemized returns by almost two-thirds — so barely 11% of Americans itemize their deduction,” he said. “So [Direct File is] not going to completely displace private return preparers, but it’s going to take care of the smaller and simpler returns, which is a great bulk of Americans.”
Direct File has been heralded as a success by the IRS, supporters and users. The agency said 90% of the 11,000 people it surveyed found their experience with Direct File to be “excellent or above average” and that the system was efficient and easy to use.
According to its report, “the IRS saw strong interest in the Direct File option from taxpayers throughout the country. Millions of people — including many from outside of Direct File’s 12 pilot states — visited the Direct File website to learn more about the new system. Over the course of the pilot, more than 3.3 million taxpayers started the eligibility checker, 423,450 taxpayers logged into Direct File and 140,803 taxpayers submitted accepted returns.”
IRS spokesperson Adolfo Flores said Direct File issued more than $90 million in tax refunds and collected $35 million in tax balances due.
A major point for the service, according to Kaplan, is that it avoided the fiascoes of past government website launches like HealthCare.gov, which was plagued with errors when it rolled out in 2013.
“The government has learned a fair amount about how to set up a website from scratch. … There were no glitches, people were able to navigate it pretty well, and they got their refunds,” Kaplan said about Direct File.
He said the program could improve to become even easier for users, adding features such as pre-populating personal tax information and connecting with state tax services. Illinois filers using Direct File can transfer their federal tax return data to MyTax Illinois.
Republican opposition to Direct File
However, some critics are targeting Direct File.
In December, a coalition of Republican lawmakers wrote a letter to President Donald Trump, Elon Musk and biotech entreprenuer Vivek Ramaswamy, calling for the president and his Cabinet to get rid of the nascent program.
Among their complaints is that Direct File is too expensive to operate, claiming the service costs “taxpayers about $814 per tax return.”
Kaplan said a more accurate estimate would be “a little under $175 per return.”
Illinois Rep. Darin LaHood, who signed the Dec. 10 letter, told the Sun Times in a statement: “The Biden-Harris administration’s unauthorized Direct File program is akin to the fox guarding the henhouse.”
LaHood said he’s deeply concerned that “Illinoisans could be susceptible to harmful mistreatment.”
Ruben, of the Economic Security Project, calls that idea “nonsense” and “a silly political argument.”
“If you’ve ever made a mistake on your taxes, you know how it works. You get a letter from the IRS that says you made a mistake. … This is how much you owe us, or this is how much we owe you back. So the IRS has always been the final arbiter of how much taxes people owe,” he said.
The digitization of forms and electronic filing saves the IRS money “in the long run,” Ruben said, as they don’t have to send as much paper to taxpayers.
Democrats like Senators Chris Coons, D-Del., and Elizabeth Warren, D-Mass., signed a Jan. 17 letter urging Trump’s Treasury nominees, including Bessent, to keep and expand Direct File.
“Polling last year found that 82% of Republicans were strongly supportive of Direct File and wanted a chance to try it themselves,” Ruben said, citing an Economic Security Project study.
The organization also conducted a survey last year asking Direct File users about their experience. “We also asked them who they had voted for in 2020, and 80% of Direct File users who had voted for Trump preferred Direct File to however they had filed taxes before,” he said.
