Exciting news for New Yorkers! Governor Kathy Hochul announced that residents can now file their state and federal income taxes online for free.
Direct File, a revolutionary self-service tool, simplifies the tax filing process. In 2024, New York launched this tool in collaboration with the IRS, initially targeting a small group of taxpayers with simple returns.
The feedback was mostly positive, with 96% of participants satisfied with their experience. As a result, the 2025 program will broaden eligibility and cover more tax credits and income types.
The IRS Direct File Arrives in New York
Governor Hochul emphasizes that Direct File makes the tax filing process more accessible and affordable, saving the average New York taxpayer around $260 in tax preparation fees.
Are you wondering if you qualify to use Direct File? Simply go to the Tax Department’s website to confirm your eligibility. In addition to Direct File, the Tax Department offers other free e-filing options.
The IRS has expanded the availability of the Direct File program for the 2025 filing season to include more states and a wider range of tax situations compared to last year’s pilot. This means that more taxpayers will be able to access this free electronic declaration service.
Expansion of states and eligibility criteria
In 2025, eligible taxpayers in 24 states can use Direct File. This includes the 12 states that participated in the previous pilot phase, as well as 12 new ones where the service will be available during the upcoming filing season.
In last year’s pilot, Direct File was available in Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington, and Wyoming.Alaska, Connecticut, Idaho, Kansas, Maine, Maryland, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania, and Wisconsin are now participating states for the 2025 season.
By 2025, over 30 million taxpayers in 24 states are expected to have access to Direct File. Other states may join the program later this year, and several have expressed interest or confirmed their commitment to Direct File by 2026.
In addition to doubling the number of states offering Direct File, the service will cover a broader range of tax situations during the 2025 filing season. In the previous year’s pilot, Direct File only addressed specific tax situations, such as reported wage income on W-2 forms, Social Security income, unemployment compensation, and certain credits and deductions.
In the 2025 season, Direct File will support 1099 forms for interest income greater than $1,500, retirement income, and Alaska Permanent Fund dividends.
During the pilot phase, Direct File helped taxpayers claim the Earned Income Credit, Child Credit, and Other Dependent Credit. This year, the service will include those who claim the Child and Dependent Care Credit, the Premium Tax Credit, the Elderly and Disabled Persons Credit, and the Credits for Retirement Savings Plans.
This year, Direct File will support taxpayers claiming deductions for Health Savings Accounts, in addition to the standard deduction, student loan interest, and educator expenses. In the coming years, the IRS intends to gradually expand the scope of Direct File to include the majority of common tax situations, with a focus on those affecting working families.
Also See:- Major changes to the Child Tax Credit in 2025 How will they affect your wallet
