IRS’s Direct File is on the chopping block in a 2025 appropriations bill

The House GOP’s Financial Services and General Government appropriations bill, released by committee chair Tom Cole of Oklahoma, includes a policy rider aimed at the IRS’s Direct File program. This rider prohibits funding for any “government-run tax preparation software that Congress has not authorized.”

This move comes shortly after the IRS announced that Direct File would become a permanent program following a successful pilot involving over 140,000 taxpayers across 12 states. The pilot program facilitated more than $90 million in refunds and reported $35 million in balances due. Treasury Secretary Janet Yellen, in testimony before the Senate Appropriations Subcommittee on Financial Services and General Government, highlighted the program’s success and plans to invite all states to participate next filing season, with further expansion to cover the most common tax situations in the coming years.

The House Republicans’ bill, which proposes a $2.2 billion cut to the IRS’s budget from fiscal 2024 levels, reflects months of criticism of the Direct File program from GOP members, state attorneys general, and state treasurers and comptrollers. Democrats have strongly opposed these proposed cuts, including a $2 billion reduction in enforcement funding. Senate Finance Committee Chairman Ron Wyden of Oregon criticized the Republican budget plan, stating that its primary aim is to help wealthy individuals evade taxes.

The Daily Scoop Podcast is available every Monday-Friday afternoon.
If you want to hear more of the latest from Washington, subscribe to The Daily Scoop Podcast on Apple Podcasts, Google Podcasts and Spotify.