IRS halts free direct tax filing option used by thousands in North Carolina
AI-generated summary reviewed by our newsroom.
- IRS ends Direct File; North Carolina and 24 other states lose free filing.
- About 296,500 taxpayers used Direct File nationally; North Carolina logged 11,800.
- Administration and GOP officials cited low use and private sector alternatives.
The Trump administration has discontinued a federal program thousands of North Carolina residents used this year to file their taxes for free.
“The IRS recently advised the NC Department of Revenue by email that IRS Direct File would not be available for the 2026 filing season,” NCDOR spokesperson Dia Harris wrote in an email Thursday to The News & Observer.
North Carolina was one of 25 states to participate in Direct File, an electronic filing system through which people could submit their federal and state tax returns to the IRS. It was piloted in 2024 with funding from the Inflation Reduction Act passed by Democrats that year, and was launched ahead of the 2025 filing season.
“The IRS Direct File tool helps remove unnecessary hurdles and fees by allowing taxpayers to file directly with the IRS for free, keeping more money in their pockets,” then-Gov. Roy Cooper said in a statement last year.
As of June, NCDOR had received around 11,800 returns through Direct File. The program was eligible to taxpayers “who file simple federal tax returns,” which excludes business incomes or gig economy income. North Carolina residents won’t be able to file state taxes through the system in 2026 as the program was halted nationwide.
Direct File has been in the crosshairs of the second Trump administration, with Republicans criticizing it as wasteful and duplicative. The GOP-backed One Big Beautiful Bill Act allocated $15 million for a task force that would replace the program. “It wasn’t used very much,” Treasury Secretary Scott Bessent, who also serves as IRS commissioner, told reporters this week. “And we think that the private sector can do a better job.”
Approximately 296,500 U.S. taxpayers submitted 2025 filing returns through Direct File, according to the Center for Taxpayer Rights, a Washington, D.C., advocacy nonprofit.
“IRS Direct File was one of the most successful and popular government programs in recent memory,” Code for America CEO Amanda Renteria wrote in an email. Her nonprofit had helped design North Carolina’s free program for filing state taxes.
Major companies that provide tax preparation services had previously lobbied against a federal tax filing option. In an email to The N&O last year, H&R Block wrote “we continue to believe this program is not in the best interest of Americans — either those who use it or those who are funding it with their tax dollars.”
And Intuit, which owns TurboTax, had called Direct File “a solution in search of a problem.”
“Free tax preparation is available to all Americans today and has been for decades,” company spokesperson Jenna Spearman said in an email Thursday.
H&R Block and Intuit both offer free tax filing services to qualifying taxpayers. But under the Biden administration, the Federal Trade Commission accused each of misleading taxpayers about filing options. In January 2024, the FTC ordered Intuit to stop “deceptive advertising” regarding its free tax products. The next month, the federal agency wrote that H&R Block had confused “many people” over their eligibility to file free returns.
“We look forward to working with the IRS to bolster the effective and broadly impactful solutions that already exist for taxpayers,” H&R Block wrote in a statement Thursday to The N&O.
This story was originally published November 6, 2025 at 12:25 PM.
