Some 30 million Americans across the country will have a new way to file their taxes next spring: Direct File, a tool developed by the Internal Revenue Service (IRS) that allows users to prepare their taxes and file online completely free of charge and without the need for any third-party provider. The tool is the first time the federal government has given taxpayers a way to file directly, and could usher in a sea change for how Americans approach Tax Day.
Direct File was first trialed this past tax season by 140,000 users across 12 states who had simple tax situations (i.e. those who use the standard deduction to file W2 income and a few other uncomplicated sources). And remarkably, the pilot went off without a hitch. Unlike the botched rollout of Healthcare.gov in 2013, the government built a website that not only stood up to traffic pressure, but received high marks from Americans. Now, Direct File will be available to Americans in 12 additional states for tax season 2025.
How did an agency like the IRS, which has long had a reputation for being frozen in the past, pull this off? It threw out the old playbook and allowed its team to borrow best practices from the private sector: testing with users, building iteratively, and fixing things along the way.
In the past, projects like Direct File were traditionally handed to outside vendors, which deliver products that can be difficult for government agencies to update themselves. But the IRS decided to build the Direct File pilot itself, eventually spending about $25 million of the nearly $80 billion earmarked for the agency in the Inflation Reduction Act, which passed in 2022.
The IRS teamed up with the United States Digital Service (USDS), which was formed in 2014 as a response to Healthcare.gov disaster, and 18F, the digital services agency within the General Service Administration, also launched in 2014. Both are tasked with bringing technological innovation to a sector known for kludgy and outdated approaches.
DESIGNED WITH TAXPAYERS
The team launched the project by interviewing taxpayers about their experiences with paying taxes. “Before we started even sketching ideas, we talked to people,” says Suzanne Chapman, design director for Direct File at USDS. “We designed with taxpayers, not [just] for taxpayers.”
During the 10 months of active development, Chapman’s team spoke to more than 195 people via one-on-one conversations. “There wasn’t a single one of those conversations that didn’t lead to something getting changed,” Chapman says. A lot of people expressed anxiety about doing taxes and a lack of confidence in doing it themselves. They liked the idea of being able to file for free with the IRS, but they didn’t exactly trust in government—particularly that it could pull off something like this.
