Trump Administration Cancels Free Tax Filing System

(This article appeared in the January/February 2026 issue of The American Postal Worker magazine)

In our March/April 2024 column, we highlighted a new public tax-filing system. The program was created by the previous presidential administration and was called Direct File. It allowed working people to fi le their taxes quickly and easily online, for free.

Direct File’s recent cancellation at the hands of the Trump White House is one small example of corporate power flexing its muscles more than ever at the expense of working people.

The free tax-filing system was the fruit of a multiyear effort of many A Grand Alliance partners, under the umbrella of the Coalition for Free and Fair Filing. The aim was to save time and money for working families. The Coalition estimates that U.S. taxpayers spend 2.25 billion hours and $45.4 billion just to fi le personal income taxes, while millions of low-income families miss out on $15 billion in tax credits and refunds.

Direct File went live as a pilot program in 12 states in 2024 and was available to taxpayers in 25 states in 2025. It saved over $70 million in people’s filing fees in just its first 15 months, despite a limited rollout. By using existing IRS data to help complete people’s filing, Direct File also saved people time, enabling most users to file in about 30 minutes.

Estimates from the Economic Security Project showed that, once Direct File was fully implemented, it would save tax-payers $23 billion a year by avoiding billions in filing fees and time costs, as well as increasing take-up of tax credits.

However, with billions in fi ling fees under threat, tax-filing corporate lobbyists stepped up their pressure campaign. Twenty-nine Republican House members issued a letter to President Trump in December 2024, calling for the program’s cancellation. The 29 had received a total of $700,000 in campaign contributions from big tax-prep tech corporations. The Trump Administration itself received $1 million for its inauguration from Intuit, the tech giant behind TurboTax.

The Trump White House announced that it would end the service in April 2025 and confirmed the closure last November.

In place of Direct File, the administration is directing people to “IRS Free File,” a collection of free services from the same tax preparation corporations. However, these services have a track record of unexpected fees, privacy breaches, and low uptake by the public.

A 2025 report from Public Citizen described these free services as hard to access by design. Many have misled consumers into agreeing to pay for services rather than using their free alternative. Research from the Coalition for Free and Fair Filing found that “Free File” services regularly allow users to be charged fees, such as when filing a state return. Often, when users incorrectly believe that they were eligible for the free service, they are instead “upgraded” and charged a fee to fi le via the service’s “free-to-fee” model. As a result, less than 3% of eligible people use “Free File.”

In the case of H&R Block, a former member of the Free File Alliance, the Federal Trade Commission

(FTC) accused the company of deleting customer data to steer eligible filers away from Free File and into paid plans.

A July 2023 senators’ report found that tax prep corporations shared tens of millions of taxpayers’ sensitive personal and financial data with social media tech giant Meta for years, without disclosing the usage or protecting the data.

The cancellation of Direct File is just one example of corporations enriching themselves at our expense. But the fact that Direct File was created in the first place is a testament to the coalition of organizations fighting for our communities; on this and many other fights, it’s up to us to stand up and win the next round. Find out more about the Coalition for Free and Fair Filing at: betterirs.org