Exciting news for New Yorkers! On Friday, Governor Kathy Hochul announced a significant update: residents can now file both their state and federal income taxes online for free.
This is all possible thanks to Direct File, a revolutionary self-service tool designed to simplify the tax filing process. In 2024, New York introduced this tool in collaboration with the IRS, initially targeting a select group of taxpayers with straightforward returns.
The feedback was overwhelmingly positive, with 96% of participants expressing satisfaction with their experience. As a result, the 2025 program is set to expand its reach, offering eligibility to a broader audience and covering more tax credits and various types of income.
The IRS Direct File Arrives in New York
Governor Hochul emphasizes that Direct File not only makes the tax filing process more accessible and affordable but also helps the average New York taxpayer save approximately $260 in tax preparation fees.
Curious if you qualify to use Direct File? Simply visit the Tax Department’s website to verify your eligibility. Besides Direct File, the Tax Department provides other e-file options to help you file your taxes at no cost.
The Internal Revenue Service (IRS) has revealed that the Direct File program will be available for the 2025 filing season in twice as many states as during last year’s pilot, as well as covering a broader range of tax situations. . This will mean that a greater number of taxpayers will be able to access this free electronic declaration service.
Expansion of states and eligibility criteria
For the 2025 filing season, eligible taxpayers in 24 states will be able to use Direct File. This includes the 12 states that participated in the previous pilot phase and another 12 new ones where the service will be available in the upcoming filing season.
In last year’s pilot, states where Direct File was offered were Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington, and Wyoming. In the 2025 season, Alaska, Connecticut, Idaho, Kansas, Maine, Maryland, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania and Wisconsin have been added to the list of participating states.
It is estimated that more than 30 million taxpayers in these 24 states will be able to use Direct File by 2025. Other states may join the program later this year, and several have shown interest or confirmed their participation in Direct File by 2026.
In addition to doubling the number of states that will offer Direct File, the service will also cover a broader range of tax situations for the 2025 filing season. During the previous year’s pilot, Direct File covered limited tax situations, including reported wage income on W-2 forms, Social Security income, unemployment compensation, and certain credits and deductions. In the 2025 season, Direct File will offer support for 1099 forms related to interest income greater than $1,500, retirement income, and the 1099 for Alaska residents reporting the Alaska Permanent Fund dividend.
During the pilot phase, Direct File also assisted taxpayers claiming the Earned Income Credit, the Child Credit, and the Other Dependent Credit. This year, the service will also include those who claim the Child and Dependent Care Credit, the Premium Tax Credit, the Elderly and Disabled Persons Credit, as well as the Credits for Contributions to Retirement Savings Plans.
Along with supporting those who claim the standard deduction and deductions for student loan interest and educator expenses, this year Direct File will also support taxpayers who claim deductions for Health Savings Accounts. In the coming years, the IRS plans to gradually expand the scope of Direct File to include most common tax situations, focusing especially on those that affect working families.