The IRS is rolling out its free tax-filing tool to 30 million Americans—and surprisingly, it’s great

Some 30 million Americans across the country will have a new way to file their taxes next spring: Direct File, a tool developed by the Internal Revenue Service that allows users to prepare their taxes and file online completely free of charge and without the need for any third-party provider. The tool is the first time the federal government has given taxpayers a way to file directly, and could usher in a sea change for how Americans approach Tax Day.

Direct File was first trialed this past tax season by 140,000 users across 12 states who had simple tax situations (i.e. those who use the standard deduction to file W2 income and a few other uncomplicated sources). And remarkably, the pilot went off without a hitch. Unlike the botched rollout of Healthcare.gov in 2013, the government built a website that not only stood up to traffic pressure, but received high marks from Americans. Now, Direct File will be available to Americans in 12 additional states for tax season 2025.

How did an agency like the IRS, which has long had a reputation for being frozen in the past, pull this off? It threw out the old playbook and allowed its team to borrow best practices from the private sector: testing with users, building iteratively, and fixing things along the way.

In the past, projects like Direct File were traditionally handed to outside vendors, which deliver products that can be difficult for government agencies to update themselves. But the IRS decided to build the Direct File pilot itself, eventually spending about $25 million of the nearly $80 billion earmarked for the agency in the Inflation Reduction Act, which passed in 2022.

The IRS teamed up with the United States Digital Service (USDS), which was formed in 2014 as a response to Healthcare.gov disaster, and 18F, the digital services agency within the General Service Administration, also launched in 2014. Both are tasked with bringing technological innovation to a sector known for kludgy and outdated approaches.

DESIGNED WITH TAXPAYERS

The team launched the project by interviewing taxpayers about their experiences with paying taxes. “Before we started even sketching ideas, we talked to people,” says Suzanne Chapman, design director for Direct File at USDS. “We designed with taxpayers, not for taxpayers.”

During the 10 months of active development, Chapman’s team spoke to more than 195 people via one-on-one conversations. “There wasn’t a single one of those conversations that didn’t lead to something getting changed,” Chapman says. A lot of people expressed anxiety about doing taxes and a lack of confidence in doing it themselves. They liked the idea of being able to file for free with the IRS, but they didn’t exactly trust in government—particularly that it could pull something like this off.

There was also “a bit of skepticism” internally, says Bridget Roberts, the IRS official who leads Direct File. Even within the agency, people were unsure if the team could build the product in such a short timeframe in the iterative, agile way it was proposing.

The team started designing a pilot. Once they had something users could try out, they put drafts in front of taxpayers to let them test drive. The team watched to see where users got tripped up and tweaked the product accordingly.

The team’s first attempt, for example, at creating a landing page for the tool “failed miserably,” says Chapman. The page contained a series of questions to determine users’ eligibility, but the answers required so much information that users thought they were already filling out their taxes. The team “went back to the drawing board,” Chapman says, and completely redid the page, making it more informational. Traditionally, the agency would have just gone with the first version and kept it.

A MODULAR SYSTEM

Direct File was designed to be scaled up and to keep humming as more people use it. This year’s version was limited to 12 states and people with the simplest tax situations. When the team first rolled it out, though, they started even smaller, with a single IRS employee in Texas.

That test drive revealed a bug: Although the user was able to make her way through the process, after she hit submit, her file wasn’t connecting to the system where it had to be processed. The Direct File team fixed the issue relatively quickly, and then began allowing more people onto the platform, slowly increasing the number of users while fixing problems along the way to ensure it didn’t crack under pressure.

If Healthcare.gov proved anything, it was that it’s very hard to launch a product to millions of people at once. But that’s how government tends to work. “Starting small, scaling up, is common practice in private industry,” says Steve Leibman, director of engineering for the Direct File pilot at USDS, but “it’s actually very rare in government.”

The IRS, for example, usually requires anything that taxpayers will use during filing season to be locked in by early December. It took “work to convince people that it’s okay to open to just one person on day one and then grow from there,” Leibman says.

Direct File was also built modularly to allow the team to change one part without having to redo the entire system. That’s particularly important for an IRS platform because the tax code “changes all the time,” Leibman says, including during filing season itself. It also allows engineers to fix things on the go.

PREFILLING THE BOXES

One of the earliest tweaks that the Direct File team made to the platform could end up being the most profound. The team noticed that users were struggling with a page where they had to manually enter their previous year’s adjusted gross income (AGI), and too many returns were being rejected because they entered it wrong. Chapman’s team eventually discovered that people were entering a number and, when they were able to advance to the next page, assuming it had been verified by Direct File,

They realized there was a simple solution at hand: The system could look up people’s AGI, which was already in their online IRS account, and automatically fill it in for them. “Overnight that dropped our rejected return rate by 25%,” says Merici Vinton, deputy director of Direct File at the IRS during the pilot

This is “the first time the IRS is filling in data for you they already have,” says Adam Ruben, vice president of campaigns and political strategy at the Economic Security Project. He hopes the IRS will do far more automation in the future, prefilling Direct File with the data that it already has access to, “so that tax filing becomes even simpler and much quicker for people.”

Nearly 50 countries around the world prefill tax returns with government data, only requiring taxpayers to either sign off on or dispute the numbers. The IRS isn’t anywhere near this level of automation, but Direct File lead Bridget Roberts says the agency is “continuing to explore” adding prefilling features to Direct File for the coming tax season. Treasury Secretary Janet Yellen, meanwhile, has said that she hopes the IRS can eventually use W2s and other government information to prepopulate Americans’ returns in future versions of Direct File.

A NATIONAL PLATFORM

Direct File processed more than 140,000 returns this year, well above its 100,000 goal. And though H&R Block suffered some outages on tax day, there were no such reports for the IRS tool. A General Services Administration survey found that more than 90% of users rated it “excellent” or “above average;” 86% of users said the experience increased their trust in the IRS. Any internal skepticism that the team would deliver evaporated.

Direct File will get an even bigger test next year. In May, the IRS announced that the tool was permanent and invited all 50 states and Washington, D.C. to adopt it. The number of states has now doubled, and more could join before next tax day. The tool will also handle more tax situations, including not just Social Security and unemployment income and some credits as last year but also 1099 income under $1,500, retirement income, and money from the Alaska Permanent Fund dividend.

More states are expected to participate in 2026, and the agency is aiming to have Direct File available to people in all 50 states and Washington, D.C. “in a couple of years,” Roberts said.

PREPARING FOR PRIMETIME

The team is now focused on getting Direct File ready by January. Even as more taxpayers and states use it, with more complex needs, the team is prioritizing keeping the platform simple and easy to use. That means continuing the conversations with taxpayers and making improvements based on that feedback.

The IRS expects that millions of people will complete their taxes through Direct File in 2025, which would mean tenfold growth from this season. “We need to make sure the systems are going to be ready for that,” says Alisa Luu, engineering director for Direct File at USDS. That involves estimating how many users per second they’re likely to get on the site and simulating that crush in a testing environment, “to make sure the infrastructure, all the software pieces are working correctly,” she says.

There’s also the question of state taxes. This season, Arizona, Massachusetts, and New York deployed an integration tool that used an API built by USDS and copied residents’ data from their federal returns over to their state ones. That’s something that potentially every state could do, though some will be more complicated than others, says Ruben from the Economic Security Project.

A POLITICAL ISSUE

The biggest hurdle facing Direct File could end up being the November election. Republicans have vowed to claw back the influx of funding the IRS received in the Inflation Reduction Act. In July, they introduced a bill in Congress that would block the IRS from continuing Direct File, and in August 19 Republican senators wrote a letter questioning whether the platform would withstand Supreme Court scrutiny, arguing it wasn’t authorized by Congress and calling it a “massive and ill-advised expansion of the power of the IRS.” They have also argued against the government directly involving itself in tax preparation, saying the private options available are sufficient.

But the cat is, in many ways, out of the bag. The IRS is now taking the lessons it learned from Direct File and bringing them to other agency work. Vinton has moved from Direct File to a different role within the agency to do just that. The early skepticism “has now turned into a lot of excitement,” Roberts says. The Americans who got to use the tool this year who said they were pleased with the experience, meanwhile, won’t likely take kindly to having it taken away.