More than 30 million Americans will be able to file taxes for free in 2025 – find out if you're one of them and what types of income are eligible

In 2025, more than 30 million Americans will be able to file their taxes for free through the IRS's Direct File program. This program was originally launched in 2024 as a pilot program and will be expanded to 24 states, with more to be added in the future.

The IRS wants to simplify tax filing with Direct File, saying the program is simple, secure and free for eligible taxpayers. Here's what you need to know if you're wondering whether you're eligible and what types of income are eligible.

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Who can use Direct File?

Only those who have lived in the eligible 24 states for all of 2024 can use Direct File. Participating states include:

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

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This program expansion was made possible by the Biden-Harris Administration's Inflation Reduction Act and provided a significant boost for working-class and middle-income families. According to a press release from the U.S. Treasury Department, Americans spend an average of $270 and 13 hours filing taxes. The IRS's goal is to help individuals and families avoid these costs.

What types of income are eligible?

With the expansions to the Direct File program, there will be more eligibility for different types of income, credits, and deductions in 2025. Here's a breakdown of the income categories eligible for free filing through Direct File:

• W-2 wage income: This applies to most employees.
• Social Security Income: If you receive Social Security retirement benefits, you can apply for free.
• Unemployment benefits: For those who received unemployment benefits in 2024, this type of income is also eligible.
• Interest income: In 2025, the program will expand to allow interest earnings over $1,500, making it easier for taxpayers with savings or investments to qualify.
• Pension and pension income: This includes non-IRA retirement income, a common source for retirees.

If your income comes from gig work, contract work (Form 1099-NEC), rental properties, or self-employment, you will need to explore other filing options as Direct File does not yet support them.

See also: IRS finalizes 10-year rule for retirement withdrawals, making things “even more insanely complicated.”

Tax credits and deductions you can claim

In addition to free filing, Direct File users can claim various tax credits and deductions. For the 2025 season, the program supports the following credits:

• Earned Income Tax Credit (EITC): An important loan for low- to moderate-income workers.
• Child tax credit: For those raising children under 17 years old.
• Loan for elderly or disabled people: This credit can provide relief to eligible seniors and people with disabilities.
• Credit for retirement savings savers: This credit applies to those who contribute to retirement plans such as 401(k)s or IRAs.

In addition, taxpayers can claim the standard deduction and certain above-the-line deductions, including student loan interest and health savings account contributions. However, Direct File does not support itemized deductions.

See also: How do billionaires pay less income tax than you? Tax deferral is their number one strategy.

Why you should check if you are eligible

For eligible taxpayers, Direct File offers a free and time-saving alternative. The program has no hidden fees, is available in Spanish, and works seamlessly on smartphones, tablets, and computers. For many, this could mean significant savings, both financially and in terms of time spent preparing taxes.

The enhanced Direct File program can provide a convenient alternative to traditional tax filing methods. As the 2025 tax season approaches, it's worth considering whether you can take advantage of this free filing option, especially if your income falls into one of the supported categories. Stay up to date on the latest developments and find out if this streamlined process could work for you.

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