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What the IRS' Direct File Suspension, Shift to Free File Means for Taxpayers and Tax Pros

November 10, 2025

The U.S. Treasury and IRS are pausing the agency’s Direct File tool and shifting resources back toward improving the long-standing Free File partnership with private tax software providers. The move—explained in a recent report to Congress—cites low participation and high operating costs as primary drivers behind the decision. 

Why the change?


Direct File was launched publicly after a successful pilot and an initial Treasury announcement positioning it as a free, government-run filing option. However, uptake was far below expectations: the IRS accepted only a small fraction of returns through Direct File. The states participating in the pilot program were informed that Direct File will not return for the 2026 filing season.

What taxpayers should know now

  • The agency says the status quo for filing and payments remains in effect for the near term; taxpayers should continue to file as they normally would for the current (2024) filing season. The IRS and Treasury will publish further guidance about electronic payments and refunds for the 2025 tax year ahead of the 2026 filing season.
  • Most refunds are already delivered via direct deposit; the shift away from Direct File won’t change that. The IRS has emphasized it will continue outreach to help taxpayers choose secure electronic payment methods. 

Why this matters for tax professionals


For CPAs and tax preparers, the pause means one less government-branded filing channel, but it also signals a renewed emphasis on the Free File ecosystem and private-sector solutions.

Firms are encouraged to pay attention to how Free File upgrades proceed and consider how client outreach, education and electronic payment options will evolve. Professional organizations and tax software vendors are likely to be engaged in the next phase of planning and implementation. 

What’s next


Treasury and the IRS plan to continue analyzing Direct File’s pilot outcomes and the Free File program’s capacity to meet taxpayer needs. Expect more detailed guidance and stakeholder engagement as agencies outline steps to improve access, security and usability for free electronic filing options. Tax professionals and interested taxpayers should monitor official channels for the forthcoming guidance. 

Learn more


• Treasury Department announcement on Direct File (initial launch/background)
• Recent coverage and analysis on the decision to pause Direct File