IRS Free File allows taxpayers to prepare and file their federal tax returns using guided tax preparation software at no cost. To be eligible for Free File in 2023, taxpayers must have had adjusted gross income of $73,000 or less in 2022. The software is offered through private companies who participate in the Free File Alliance in partnership with the IRS.
Despite providing free services to taxpayers with low to moderate incomes, Free File has been controversial. To entice private companies to participate in the Free File Alliance, the IRS agreed that the agency would not develop comparable filing software. But taxpayers found it difficult to access Free File on the companies’ websites and were instead often led to for-fee services. By 2019, Free File Alliance’s practices came under increased scrutiny by the press, Congress, and state attorneys general. Intuit and H&R Block dropped out of the alliance the following year.
While 70 percent of taxpayers were eligible to use Free File, only 3 percent (about 2.5 million) participated in 2020, and the numbers appear to have declined since then.
The Inflation Reduction Act of 2022 provided the IRS with $15 million to design an IRS-run free direct e-file system. In May 2023, the IRS announced that it would roll out a small pilot project (Direct File) in 2024. In October 2023, the agency released additional details about the pilot program, including the 13 states where it would be available (four of which—Arizona, California, Massachusetts and New York—have state income taxes and will integrate state online filing with the federal program).
Updated January 2024
Internal Revenue Service. 2024. “IRS Free File: Do your Taxes for Free.” Washington, DC: Internal Revenue Service.
Internal Revenue Service. 2023. “IRS advances innovative Direct File project for 2024 tax season; free IRS-run pilot option projected to be available for eligible taxpayers in 13 states.” IR-2023-192. Washington, DC: Internal Revenue Service.
Internal Revenue Service. 2023. IRS Report to Congress: Inflation Reduction Act Section 10301(1)(B) IRS-Run Direct e-File Tax Return System. Publication 5788(5-2003). Washington, DC: Internal Revenue Service.
Moynihan, Daniel. 2022. “Digital Government, Public-Private Partnerships, and Administrative Burdens: The Free File Program.” Washington, DC: Georgetown University’s McCourt School of Public Policy.
Boddupalli, Aravind. 2023. “The Uncertain Future of the IRS Free File Program.” TaxVox. Washington, DC: Urban-Brookings Tax Policy Center.
US Department of the Treasury’s Treasury Inspector General for Tax Administration. 2020. “Complexity and Insufficient Oversight of the Free File Program Result in Low Taxpayer Participation.” Washington, DC: US Department of the Treasury.
MITRE. 2019. “Independent Assessment of the Free File Program.” MITRE: McLean, VA.
Elliott, Justin, and Lucas Waldron. 2019. “Here’s How TurboTax Just Tricked You into Paying to File Your Taxes.” ProPublica, April 22, 2019.
Collins, Erin M. 2000. “Legislative Recommendation #4: Set Goals for Substantially Increasing the Use of the Free File Program by Filing Season 2025 and Replace Free File If Those Goals Are Not Attained.” In National Taxpayer Advocate 2021 Purple Book. Washington, DC: Internal Revenue Service, Office of the Taxpayer Advocate.