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Data: Taxpayers Missing Out on Chance to File for Free
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do not influence our editors’ opinions or ratingsData: Taxpayers Missing Out on Chance to File for Free
Despite 70% of taxpayers qualifying for Free File, less than 1.9% used the service in fiscal year 2023.
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Economist & Spokesperson
19 years of experience Expertise Economics Data analysis Personal financeAs NerdWallet’s Senior Economist, Elizabeth Renter spends her time analyzing economic trends and data to help people make more informed decisions about their personal finances. Her work has been cited by The New York Times, The Washington Post, the "Today" show, CNBC and elsewhere. Prior to joining NerdWallet in 2014, she was a freelance journalist. She received a Masters of Science in Finance and Economics from West Texas A&M University, and focused her elective coursework on macroeconomics and analytics. When she’s not at work, Elizabeth enjoys college football, old houses, traveling to old cities and powerlifting. She is based in Durham, North Carolina.
As NerdWallet’s Senior Economist, Elizabeth Renter spends her time analyzing economic trends and data to help people make more informed decisions about their personal finances. Her work has been cited by The New York Times, The Washington Post, the "Today" show, CNBC and elsewhere. Prior to joining NerdWallet in 2014, she was a freelance journalist. She received a Masters of Science in Finance and Economics from West Texas A&M University, and focused her elective coursework on macroeconomics and analytics. When she’s not at work, Elizabeth enjoys college football, old houses, traveling to old cities and powerlifting. She is based in Durham, North Carolina. Published in Economist & Spokesperson + more + more
Editor & Content Strategist
Expertise Taxes InvestingSabrina Parys is an editor and content strategist on the taxes and investing team at NerdWallet, where she manages and writes content on personal income taxes. Her previous experience includes five years as a copy editor and associate editor in academic and educational publishing. She is based in Brooklyn, New York.
Sabrina Parys is an editor and content strategist on the taxes and investing team at NerdWallet, where she manages and writes content on personal income taxes. Her previous experience includes five years as a copy editor and associate editor in academic and educational publishing. She is based in Brooklyn, New York. Published in Editor & Content Strategist + more + moreFree File is a program that allows the majority of taxpayers to file their federal income tax returns for free through participating software companies. But the service remains woefully underused.
Free File is a program that allows the majority of taxpayers to file their federal income tax returns for free through participating software companies. But the service remains woefully underused.Despite 70% of taxpayers qualifying for Free File, less than 1.9% used the service in fiscal year 2023, the most recent year for which this IRS data is available, according to NerdWallet analysis. This marks a shortfall of roughly 101 million income tax filers who may have missed the opportunity to file their federal income tax returns for free that year.
Despite 70% of taxpayers qualifying for Free File, less than 1.9% used the service in fiscal year 2023, the most recent year for which this IRS data is available, according to NerdWallet analysis. This marks a shortfall of roughly 101 million income tax filers who may have missed the opportunity to file their federal income tax returns for free that year.Looking at the past 10 years of IRS data, Free File usage has only dipped below 2% in one year, 2017. On average, 2.3% of filers have used the service each year over the past decade and 2.2% in the previous fiscal year (2022).
Looking at the past 10 years of IRS data, Free File usage has only dipped below 2% in one year, 2017. On average, 2.3% of filers have used the service each year over the past decade and 2.2% in the previous fiscal year (2022).Last tax season, the IRS piloted another free tax filing option: Direct File. This year, that program is available in more states and will likely impact Free File usage. For taxpayers, it opens additional opportunities to file a federal tax return at no cost. These two programs and other filing options all feature different qualification standards and potential benefits.
Last tax season, the IRS piloted another free tax filing option: Direct File. This year, that program is available in more states and will likely impact Free File usage. For taxpayers, it opens additional opportunities to file a federal tax return at no cost. These two programs and other filing options all feature different qualification standards and potential benefits.Note: Despite recent confusion surrounding the availability of Direct File, both this and Free File remain online and accepting federal tax filings.
Note: Note: Despite recent confusion surrounding the availability of Direct File, both this and Free File remain online and accepting federal tax filings.Free File: What you should know
Free File: What you should knowThe Free File program is essentially an agreement between the IRS and private tax software companies, known collectively as Free File Inc., formerly known as the Free File Alliance. Companies within this alliance offer taxpayers the opportunity to file their federal returns at no cost if they meet certain requirements. Each year, the income standards are set to ensure that 70% of federal taxpayers qualify for the program.
The Free File program is essentially an agreement between the IRS and private tax software companies, known collectively as Free File Inc., formerly known as the Free File Alliance. Companies within this alliance offer taxpayers the opportunity to file their federal returns at no cost if they meet certain requirements. Each year, the income standards are set to ensure that 70% of federal taxpayers qualify for the program.For the current tax filing season, filers who had an adjusted gross income of $84,000 or less in 2024 qualify for the program. Tax software providers in the program may have additional stipulations, however, and not all offer state income tax return filing. The IRS Free File search tool can help taxpayers determine if they qualify and send them to the appropriate software websites.
For the current tax filing season, filers who had an adjusted gross income of $84,000 or less in 2024 qualify for the program. Tax software providers in the program may have additional stipulations, however, and not all offer state income tax return filing. The IRS Free File search tool can help taxpayers determine if they qualify and send them to the appropriate software websites.Direct File may also be available in your state
Direct File may also be available in your stateThe newer IRS Direct File program bypasses the use of private software providers altogether, allowing taxpayers to file their federal returns directly with the government agency. The program is free, but currently only available in 25 states.
The newer IRS Direct File program bypasses the use of private software providers altogether, allowing taxpayers to file their federal returns directly with the government agency. The program is free, but currently only available in 25 states.The income limits are $200,000 or less for single filers with one employer or $168,600 or less for those with multiple employers. For married couples filing jointly, combined wages must be $250,000 or less, and neither spouse can exceed the single filer thresholds on their own. For those married filing separately, the threshold is $125,000 or less.
The income limits are $200,000 or less for single filers with one employer or $168,600 or less for those with multiple employers. For married couples filing jointly, combined wages must be $250,000 or less, and neither spouse can exceed the single filer thresholds on their own. For those married filing separately, the threshold is $125,000 or less.Because Direct File doesn’t support itemized deductions and many IRS forms, it is most appropriate for people with simple returns. The service doesn’t support state filing, so it will direct you to your state’s free filing tool once your federal return is complete.
Because Direct File doesn’t support itemized deductions and many IRS forms, it is most appropriate for people with simple returns. The service doesn’t support state filing, so it will direct you to your state’s free filing tool once your federal return is complete.» MORE: Direct File eligibility details
» » MORE: MORE: Direct File eligibility detailsBeware of “free” tax software
Beware of “free” tax softwareNo one wants to pay for things they can get for free, but taxpayers should be cautious when looking into various free filing options. Both Free File and Direct File are reputable choices for those who qualify, but some tax software providers offer “free versions” that aren’t necessarily governed by the same rules.
No one wants to pay for things they can get for free, but taxpayers should be cautious when looking into various free filing options. Both Free File and Direct File are reputable choices for those who qualify, but some tax software providers offer “free versions” that aren’t necessarily governed by the same rules.» MORE: Additional free filing options
» MORE: MORE: Additional free filing optionsTo ensure you’re taking advantage of the official programs, access them through IRS.gov. And if you don’t qualify for Free File or Direct File, read carefully about what’s included in the tax software program you sign up to use. Some additional costs may be warranted — such as those for certain forms — whereas others are entirely optional, such as audit protection or access to a tax professional.
To ensure you’re taking advantage of the official programs, access them through IRS.gov. And if you don’t qualify for Free File or Direct File, read carefully about what’s included in the tax software program you sign up to use. Some additional costs may be warranted — such as those for certain forms — whereas others are entirely optional, such as audit protection or access to a tax professional. About the author Elizabeth Renter Elizabeth Renter Elizabeth Renter's work as NerdWallet’s Senior Economist has been cited by The New York Times, The Washington Post, CNBC and elsewhere. See full bio.Helpful resources
Helpful resources How Federal Tax Brackets and Rates Work Capital Gains Tax: Long and Short-Term Rates for 2025-2026 How to Fill Out Your W-4 Form and When to Adjust It More like this Taxes 2026 Tax Brackets and Federal Income Tax Rates The IRS adjusts the federal tax brackets annually to keep pace with inflation. The 2026 tax brackets apply to taxes filed in 2027. Bella Avila Standard Deduction for 2025 and 2026: Amounts, When to Take The standard deduction is a popular way for taxpayers to reduce their taxable income. Your deduction amount depends on your age, filing status and other factors. 2 By Sabrina Parys, Tina Orem Capital Gains Tax: Long and Short-Term Rates for 2025-2026 Capital gains are the profits from the sale of assets. They can be subject to short-term or long-term tax rates. 2 By Sabrina Parys, Tina Orem 25 Popular Tax Deductions and Tax Breaks for 2025-2026 A deduction cuts the income you're taxed on, which can mean a lower bill. A credit cuts your tax bill directly. Learn more about common tax breaks and write-offs — and how to claim them. 2 By Sabrina Parys, Tina Orem Federal Income Tax Calculator and Refund Estimator 2025-2026 Estimate your 2026 tax refund or bill using our free income tax calculator. Enter your income, age and filing status to get started. Sabrina Parys How Federal Tax Brackets and Rates Work Contrary to popular belief, your income isn't taxed at just one rate. The U.S. has a progressive tax system, meaning different portions of your income get taxed at different rates. 2 By Sabrina Parys, Tina Orem 2025 Tax Brackets and Federal Income Tax Rates The 2025 federal income tax rates range from 10% to 37% and apply to taxes due by April of this year. Find out which bracket you're in. Bella Avila 2026 Tax Brackets and Federal Income Tax Rates The IRS adjusts the federal tax brackets annually to keep pace with inflation. The 2026 tax brackets apply to taxes filed in 2027. Bella Avila Standard Deduction for 2025 and 2026: Amounts, When to Take The standard deduction is a popular way for taxpayers to reduce their taxable income. Your deduction amount depends on your age, filing status and other factors. 2 By Sabrina Parys, Tina Orem Capital Gains Tax: Long and Short-Term Rates for 2025-2026 Capital gains are the profits from the sale of assets. They can be subject to short-term or long-term tax rates. 2 By Sabrina Parys, Tina Orem 25 Popular Tax Deductions and Tax Breaks for 2025-2026 A deduction cuts the income you're taxed on, which can mean a lower bill. A credit cuts your tax bill directly. Learn more about common tax breaks and write-offs — and how to claim them. 2 By Sabrina Parys, Tina Orem Federal Income Tax Calculator and Refund Estimator 2025-2026 Estimate your 2026 tax refund or bill using our free income tax calculator. Enter your income, age and filing status to get started. Sabrina Parys How Federal Tax Brackets and Rates Work Contrary to popular belief, your income isn't taxed at just one rate. The U.S. has a progressive tax system, meaning different portions of your income get taxed at different rates. 2 By Sabrina Parys, Tina Orem 2025 Tax Brackets and Federal Income Tax Rates The 2025 federal income tax rates range from 10% to 37% and apply to taxes due by April of this year. Find out which bracket you're in. Bella Avila 2026 Tax Brackets and Federal Income Tax Rates The IRS adjusts the federal tax brackets annually to keep pace with inflation. The 2026 tax brackets apply to taxes filed in 2027. Bella Avila Standard Deduction for 2025 and 2026: Amounts, When to Take The standard deduction is a popular way for taxpayers to reduce their taxable income. Your deduction amount depends on your age, filing status and other factors. 2 By Sabrina Parys, Tina Orem Capital Gains Tax: Long and Short-Term Rates for 2025-2026 Capital gains are the profits from the sale of assets. They can be subject to short-term or long-term tax rates. 2 By Sabrina Parys, Tina Orem 25 Popular Tax Deductions and Tax Breaks for 2025-2026 A deduction cuts the income you're taxed on, which can mean a lower bill. A credit cuts your tax bill directly. Learn more about common tax breaks and write-offs — and how to claim them. 2 By Sabrina Parys, Tina Orem