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More Americans will be able to file their taxes for free through the IRS next year

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Filing taxes will get easier and cheaper for more Americans next year.

The Internal Revenue Service and U.S. Treasury Department announced Thursday that the Direct File free tax filing initiative they piloted in some states this year will become a permanent option and expand to all 50 states and Washington D.C. for the 2025 filing season.

"The Treasury Department and IRS look forward to working with states to expand Direct File for Americans across the country," Treasury Secretary Janet Yellen said in a statement.

In 2024, filers in 12 states with "simple" tax situations, such as only having W-2 income and earning less than $200,000 a year, were able to try the new Direct File tool to submit their federal tax returns. More than 140,000 taxpayers used the free filing option, the IRS reports, exceeding the agency's expectations for the pilot program. 

Beyond increasing access to the Direct File program to all states, the IRS is working on other ways to broaden eligibility.

"The goal in the coming years is to expand the reach and tax scope of Direct File to provide an option for working-and middle-class taxpayers nationwide, and Treasury and IRS plan to announce more details on expanded eligibility in the coming months," a Biden administration official told CNBC Make It in an email.

The IRS also announced it would extend its Free File program through 2029. The program launched in 2003 and allows taxpayers with adjusted gross incomes of $79,000 or less to use commercial tax preparation software for free through the IRS's private partners. 

"We were pleased to see growth in the program this year, and we look forward to continuing this important collaboration with the tax software industry," IRS Commissioner Danny Werfel said in the announcement. "Free File was part of a successful filing season at the IRS that saw increased interest in a range of free programs to help taxpayers."

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