Republicans in Congress are pushing a budget plan that would kill the IRS Direct File program within 30 days, shifting control of free tax filing to private companies like TurboTax and H&R Block.
At a Glance
- A Republican budget bill seeks to end the IRS Direct File program within 30 days
- The proposal allocates $15 million to develop public-private filing partnerships
- Direct File debuted in 2024 and served over 140,000 users in its pilot phase
- The bill proposes creating a task force to oversee private tax prep collaboration
- Democrats argue the move harms taxpayers by eliminating a free public service
Private Hands, Public Fallout
A sweeping Republican-led budget proposal now under House debate includes a bombshell provision: terminate the IRS Direct File program within 30 days and replace it with a private-sector partnership model. The plan, championed by former President Donald Trump and his allies, redirects the future of free tax filing toward companies like H&R Block and TurboTax—firms long criticized for profiting from a convoluted filing process.
The bill earmarks $15 million for the Treasury Department to explore a new tax-filing infrastructure, centered on public-private collaboration. A task force would design and manage these partnerships under IRS oversight, with the stated goal of offering free filing options to 70% of taxpayers. But critics see a deeper agenda: rolling back government innovation in favor of entrenched corporate players.
Watch a report: Congress Debates Future of IRS Direct File.
The Direct File platform launched in 2024 across 12 states, providing a sleek, no-cost option for simple returns. Over 140,000 taxpayers used it in its first season. Encouraged by the results, the IRS had planned to expand Direct File nationwide this year.
Ideological Lines Drawn
Democrats have swiftly mobilized against the GOP proposal, framing it as a giveaway to the tax software lobby. Lawmakers argue that eliminating Direct File would dismantle a rare government tech success story and force Americans back into a confusing, costly system. “Ending Direct File would hurt everyday Americans,” said one Democratic representative during a House hearing.
Treasury Secretary Scott Bessent, under intense questioning, confirmed that Direct File will remain active for this tax season but stopped short of promising its long-term future. His remarks suggest the administration is walking a political tightrope: maintaining the service for now while courting support for the broader budget deal.
Meanwhile, Trump has labeled the budget proposal a “big, beautiful bill” and aligned it with his $4.5 trillion tax cut push. Tech advisor Elon Musk has also called for eliminating 18F, the federal digital team behind Direct File, further fueling speculation that a broader tech rollback is in motion.
A War Over Who Owns Simplicity
At the heart of the battle is a fundamental question: Should the government provide basic digital services directly, or defer to private companies? For decades, commercial tax preparers have lobbied to block free-filing initiatives, and the new bill appears to reward those efforts handsomely.
The GOP argues that competition will yield better outcomes, but critics warn it’s a Trojan horse. Removing Direct File, they contend, isn’t about efficiency—it’s about keeping profits in private hands and taxpayers at the mercy of upsells and service fees.
As the legislation advances, the stakes are more than financial. This is a fight over accessibility, transparency, and whether a digitized federal government can stand its ground against deeply entrenched industry interests. With July hearings on the horizon, the fate of how America files its taxes hangs in the balance.
