Direct File Act of 2026

The Direct File Act of 2026 aims to codify and expand a permanent federal program that allows taxpayers to prepare and file their income tax returns online directly with the IRS at no cost. The bill would prohibit the Treasury Department from entering into any agreements that limit the government's ability to provide these free services, effectively preventing private tax-preparation companies from restricting government-run competition. The proposed system would be designed to be user-friendly, mobile-optimized, and available in multiple languages with integrated customer support like live chat.

If enacted, the bill would allow the IRS to use existing data in its records to automatically fill in parts of a taxpayer's return, reducing the need for manual data entry. It also proposes a grant program to help states integrate their own tax filing systems with the federal platform, potentially allowing citizens to file both federal and state taxes in one place. The legislation sets a goal for at least 50% of taxpayers in participating states to be eligible for the program by the 2028 tax year, focusing on simplifying the process and saving citizens the time and money typically spent on third-party tax software.