Save Money This Tax Season: The Latest on Direct File

Life offers few certainties, and taxes are undoubtedly one of them—a reality that can feel daunting for many. Tax season often brings a sense of stress and frustration. However, there’s some good news on the horizon this year: the expansion of IRS Direct File. 

Direct File is a promising step toward simplifying taxes and making the process more accessible, but it still has its barriers, primarily limited eligibility. However, new updates for 2025 are expanding eligibility and making the process even more efficient. Let’s review the latest news on direct file and how it may make your tax filing season simpler! 

What is Direct File?

Direct File is a new tool designed to make filing federal taxes simpler, faster, and more accessible for taxpayers. Unlike traditional tax preparation software or hiring a professional, Direct File allows eligible individuals to file their federal taxes for free directly through an IRS-supported platform. 

This initiative is part of an effort to reduce the financial burden and complexity associated with tax filing, particularly for those with straightforward returns. While it’s a significant step forward in improving access to tax filing resources, Direct File is still in its early stages, with limited availability and features that may not yet meet the needs of all taxpayers.

There are many advantages to Direct File for those who are eligible, including:

  • Straightforward Process – Simply file through Direct File and you are all set. No need to jump through all of the hoops that the other services make you go through. 
  • Eliminates Costs—Filing through the Direct File process is free, so you can save money by doing it this way. 
  • Easy to Understand – Some third-party providers have made their software a challenge to understand. However, the Direct File program is quite straightforward and accessible. 

What’s New in 2025?

Direct File now supports new income sources, credits & deductions. *New in 2025

Income Wage income (W-2) Social Security income (SSA-1099) Unemployment compensation (1099-G) *Interest income (1099-INT)
*Retirement income (excluding IRAs) (1099-R) – starting in March
*Alaska Permanent Fund Dividends for Alaska residents (1099-MISC)
Credits Earned Income Tax Credit Child Tax Credit  Credit for Other Dependents
*Child and Dependent Care Credit
*Premium Tax Credit
*Retirement Savings Contributions Credit (Saver’s Credit)
*Credit for the Elderly and Disabled
DeductionsStandard deduction only Student loan interest
Educator expenses
*Health Savings Account contributions


Direct File has expanded eligibility to 25 states.

  • Alaska, Arizona, California, Connecticut, Florida, Idaho, Illinois, Kansas, Maryland, Massachusetts, Maine, New Hampshire, New Jersey, New Mexico, New York, Nevada, North Carolina, Oregon, Pennsylvania, South Dakota, Tennessee, Texas, Washington, Wisconsin, and Wyoming.

So, with all the changes, how do you know if you’re eligible? Direct File has an eligibility tracker where you can easily find out if you’re eligible and quickly get started on your tax prep.

Benefits of Using Direct File 

  • Cost Savings – No one wants to shell out money that they don’t have to, and you don’t have to worry about that with the Direct File program. Tax preparation through Direct File is free.
  • Transparency—A common frustration during the tax preparation process is that most third-party providers try to upsell you on add-ons that you don’t truly need. The IRS Direct File program doesn’t do that. 
  • Efficiency—Direct File is an efficient tool that streamlines the tax filing process. It helps you submit your taxes with ease and receive your refund quickly.

Additional Tips for Saving During Tax Season

  • Organize Your Documents Early—Set yourself up for success. By organizing and reviewing your documents throughout the year, you can avoid last-minute errors and mistakes. 
  • Claim All Eligible Credits and Deductions—To maximize your refund, look for all credits and deductions that you qualify for.

Take Control Over Your Taxes This Season

Tax season can feel overwhelming, but there’s no need to let it steal your peace of mind. Take a moment to check if you’re eligible for Direct File—it’s a simple and straightforward way to take charge of your taxes. If you qualify, you’ll find it makes the whole process much easier, giving you one less thing to worry about this season.