What Happened?
The IRS Free File Program reaches only about 3% of eligible taxpayers each year, leaving Congress and the Trump administration to decide whether to keep, improve, or replace it. "The IRS Free File Program: An Overview," a report issued by Congress showed that E-filing climbed from 80 percent in 2012 to over 93 percent in fiscal 2025, yet FFP participation fell from roughly 6 percent of eligible taxpayers at its 2004 peak to about 3 percent, roughly 3.2 million people, in fiscal 2025.
Why Does it Matter to Me?
In fiscal 2019 alone, more than 34.5 million taxpayers who qualified for the free program paid for e-filing through member companies instead, according to the Treasury Inspector General for Tax Administration.
The pool of participating companies has also shrunk: H&R Block and Intuit, which together served roughly 70 percent of FFP participants, left after the 2020 and 2021 filing seasons, and the total number of member companies fell by more than half, from 17 at the program's 2002 founding to eight in 2026.
Supporters say the FFP saved taxpayers $1.5 billion in preparation and filing fees from 2003 to 2018.
Both Sides, Now
Supporters, including Free File, Inc. member companies, argue the FFP saved taxpayers $1.5 billion in preparation and filing fees from 2003 to 2018; separately, the current agreement, extended through Oct. 31, 2029, no longer bars the IRS from building its own free e-filing system, removing a constraint central to the program since its founding.
Critics say the program should be replaced by a government-run tool open to all taxpayers, pointing to confusing web pages, privacy concerns, and the pattern of eligible filers paying for services they could have gotten free, documented by the U.S. Treasury Department.
The IRS launched Direct File (DF), its own filing tool, in 2024 after the Inflation Reduction Act of 2022 gave it $15 million to create a task force to explore whether an IRS-run program was feasible. Treasury, under President Donald Trump's administration, announced last fall that it was suspending direct file for the 2026 filing season, citing high costs and limited participation.
Congress has not voted to authorize or block that suspension.
What Happens Next?
Four bills in the current Congress address the question directly, all sitting in committee with no further action recorded: two would restore Direct File, and two would prohibit the IRS from offering it.
A 2025 Treasury report outlined planned improvements to Free File Program awareness and oversight, and additional evaluations by the the investigative arm of Congress, the Government Accountability Office (GAO), are also planned.
The Free File agreement between the IRS and its member companies runs through Oct. 31, 2029.
---
AllCiv makes it easy to stay politically informed and involved.
---
Spot something wrong? Report an issue with this article