The Trump Administration is Ending Direct File, Increasing Tax Filing Costs for Everyday Americans by Billions of Dollars

In a win for tax industry lobbyists, the Trump administration has announced it is ending the Direct File program. It’s a move that will cost American taxpayers $23 billion a year.

WASHINGTON, D.C. – The report released this week from the Treasury Department confirms that the Trump Administration is ending Direct File, dismantling one of the most successful government technology initiatives in recent memory. The report represents a setback for taxpayers and reveals that the Trump administration has no interest in improving the tax system for everyday Americans.

Tax filing is unnecessarily burdensome and costly, but Direct File was fixing that. Each year, Americans spend 2.25 billion hours and $45.4 billion just to file personal income taxes, while millions of low-income families miss out on $15 billion in tax credits and refunds. Direct File was already having an immediate impact here, saving hundreds of thousands of taxpayers over $70 million in filing fees in just its first 15 months. (It saved people more in fees than it cost the IRS to provide it.) It also saved people time, using existing IRS data to import information about users’ households and income, enabling most users to file in about 30 minutes. This impact was set to scale rapidly. Once Direct File was fully implemented and available nationwide, it was projected to save taxpayers $23 billion a year by helping Americans avoid $8 billion in filing fees and $3 billion in time costs, while accessing $12 billion in credits that currently go unclaimed.

Direct File wasn’t just impactful; it was popular, achieving a 98% user satisfaction rating. Survey after survey has shown that the overwhelming majority (87%) of taxpayers want the IRS to provide a free, easy way for them to file their taxes directly with the IRS – including 82% of Republicans. The Trump administration’s report ignores these facts and misleadingly claims that they are ending Direct File due to insufficient participation in the program. In reality, the Trump administration sought to sabotage the uptake of Direct File from the beginning. Immediately after taking office, the Trump administration began preventing the IRS from conducting outreach about the program. Just a week after the start of the tax season, administration officials sent tweets that suggested Direct File had been ‘deleted,’ instantly cratering use of the tool by 38%. The report also asserts that Direct File’s cost per return was too expensive, a justification that ignores (or celebrates) the Trump administration’s intentional constraint on program uptake and fails to distinguish between one-time startup costs for the new service and its ongoing maintenance costs – both of which came in below expectations.

To replace Direct File and solve our country’s long-festering tax filing crisis, the administration’s new report offers basically nothing. In the report, the administration recommends doing little more than redoubling the IRS’s efforts to promote IRS Free File, the same broken program that has been failing taxpayers for over 20 years. It’s well documented that IRS Free File doesn’t live up to its name. It regularly allows users to be charged fees, such as when filing a state return, or when users who thought they were eligible for the free service are instead “upgraded” and charged a fee to file via the service’s “free-to-fee” model. As a result, less than 3% of eligible people use the service, with many prior users being frustrated by its use of bait-and-switch tactics.

Beyond celebrating the administration’s sabotage of Direct File and stating their intention to double down on Free File, the report doesn’t offer taxpayers new information or solutions. It references an August 2025 survey that the IRS implemented during the report’s production, which assessed taxpayer preferences for free tax filing services, including Direct File. However, the administration is refusing to release the survey’s results, claiming their own survey was “statistically unrepresentative.” Instead, the administration claims it will do another survey on the same subject. How many times will the IRS have to ask Americans if they want free, government-provided tax filing before the Trump administration is willing to believe our answer?

The facts are simple: Direct File was wildly popular with American taxpayers, was delivered below its projected costs, saved taxpayers more money than it cost to provide, and was well on its way to transform tax filing from an expensive and burdensome slog into an efficient, easy-to-use, fully free, modern government service.

The decision to eliminate Direct File exposes the Trump administration’s true priorities. While claiming to champion lower costs and government efficiency, they’re ending a program that demonstrably delivered on both. Instead of continuing to expand a service that was improving tax filing for everyday Americans, President Trump, along with DOGE, and billionaires Elon Musk and Treasury Secretary Scott Bessent, are capitulating to Wall Street lobbyists and the for-profit tax preparation companies that profit from our broken, complex filing system.

Email [email protected] to speak with one of these experts about the Trump administration’s decision to end Direct File.

Groundwork Collaborative, Emily DiVito:

“The Trump administration’s decision to kill Direct File is a giveaway to private tax prep companies and a slap in the face to American families. Direct File made tax filing free and simple, proving the government can deliver tools that work for everyone – not just the well-connected,” said Emily DiVito, Senior Advisor for Economic Policy at Groundwork Collaborative. “Scrapping the program will cost taxpayers billions in unnecessary fees at a time when families can least afford it.”

Public Citizen, Susan Harley:

“Many Americans are suffering right now—from dealing with high prices to facing an onslaught of cuts to critical services like nutrition assistance and Medicaid. That makes it particularly galling to see the Trump administration taking away a cost-saving tool like Direct File,” said Susan Harley, managing director of Public Citizen’s Congress Watch division. “This is just another corrupt giveaway to Big Business. Ending the Direct File program is clear pandering to very same tax prep companies who were charged with steering filers into expensive products when they could have filed for free. In contrast, the IRS-owned service was always provided at zero cost.”

“Taxpayers who used Direct File were overwhelmingly satisfied with it. IRS’s and Treasury Department’s decision to not include their most recent survey as part of the report to Congress directly stifles the voices respondents who wanted to keep Direct File as an option for filers.”

Economic Security Project, Adam Ruben:

“The bottom line here is that the government built something that people liked, but that doing so upset the private industry. So now the Trump Administration is bending to the power and influence of that industry at the expense of the American people. This is another sorry chapter in the decades-long campaign to undermine the IRS and erode public trust in government. At Economic Security Project, we remain committed to work to create a tax system that serves everyone, not just the wealthy and well-connected,” said Adam Ruben, Vice President of Campaigns and Political Strategy at Economic Security Project.