The 2025 Tax Season: What You Need to Know
The 2025 tax season is set to kick off on January 27, with more taxpayers gaining access to Direct File, the IRS’ free tax filing program that was launched in 2024.
Direct File Expansion
Starting on January 27, Direct File will be available to eligible taxpayers in 25 states, including 12 states from the 2024 pilot and 13 new states. The U.S. Department of the Treasury estimates that over 30 million taxpayers across these states will be eligible to use Direct File in 2025.
IRS Commissioner Danny Werfel stated that new features in Direct File for 2025 will make tax returns “quicker and easier” for users. These features aim to cover more tax situations than the previous year.
Participating States and Features
The participating states for the 2025 tax season include Alaska, Arizona, California, Connecticut, Florida, Idaho, Illinois, Kansas, Maine, Maryland, Massachusetts, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, South Dakota, Tennessee, Texas, Washington state, Wisconsin, and Wyoming.
After completing federal returns through Direct File, users can seamlessly transition to their state’s software for state filings, with the possibility of data transfer for some states. However, individuals who did not reside in a participating state for the entirety of 2024 are not eligible for Direct File.
Direct File enhancements for 2025 include the ability to support interest income exceeding $1,500, pension and annuity income (excluding individual retirement accounts), and Alaska Permanent Fund Dividends. Various tax breaks such as the child and dependent care credit, premium tax credit for Marketplace insurance, credit for elderly or disabled, retirement saver’s credit, and standard deduction, will also be accommodated by Direct File.
Additionally, filers can now import data from their IRS account, including personal information, identity protection pin, and some details from Form W-2.
Free Tax Filing Options
In addition to Direct File, most taxpayers may qualify for IRS Free File, providing free guided tax preparation through private software partners. Eligible taxpayers can start e-filing returns prepared by Free File on January 27 if their 2023 adjusted gross income was $79,000 or less.
Notable Programs
Other programs like Volunteer Income Tax Assistance, Tax Counseling for the Elderly, and MilTax also offer free tax preparation services for eligible filers.
Don’t miss these insights:
– Direct File expansion for 2025
– Participating states and new features
– Other free tax filing options
Get ready for the 2025 tax season with these important details and make sure you don’t miss out on the available free tax filing options.