North Carolina to offer free tax filing option next year made possible by President Biden’s Inflation Reduction Act
WASHINGTON – The U.S. Department of the Treasury and Internal Revenue Service (IRS) announced that North Carolina will join IRS Direct File for Filing Season 2025. This initiative, enabled by President Biden’s Inflation Reduction Act, aims to improve customer service and ensure taxpayers claim eligible benefits and deductions.
Following a successful pilot program in 12 states where 140,000 taxpayers claimed over $90 million in refunds and saved approximately $5.6 million in filing costs using the new free online tool, Treasury and the IRS are expanding Direct File as a permanent offering. North Carolina joins other states such as Oregon, New Jersey, Pennsylvania, New Mexico, and Connecticut in providing this service. At least 1.25 million North Carolinians will be eligible to use the free online filing tool next Filing Season.
“Thanks to President Biden’s Inflation Reduction Act, more than 1.25 million North Carolina taxpayers will be able to file their taxes online for free, directly with the IRS this coming Filing Season,” said U.S. Secretary of the Treasury Janet L. Yellen. “Direct File will save North Carolinians time and money and help ensure they receive the tax benefits they are owed.”
Governor Roy Cooper added: “Filing taxes is often stressful, expensive, and time-consuming for North Carolina taxpayers and families. The IRS Direct File tool helps remove unnecessary hurdles and fees by allowing taxpayers to file directly with the IRS for free, keeping more money in their pockets.”
The Treasury Department aims to expand Direct File's reach nationwide for working- and middle-class taxpayers using resources from the Inflation Reduction Act. This initiative aligns with the Biden-Harris Administration’s goal of delivering modern customer service while ensuring that taxpayers receive credits like the Child Tax Credit and Earned Income Tax Credit.
BACKGROUND ON THE DIRECT FILE PILOT PROGRAM
The average American spends $270 and 13 hours filing their taxes annually (Taxpayer Burden Survey). The Inflation Reduction Act mandated an IRS study on a potential IRS-run Direct e-File System allowing free tax filings directly with the IRS. Following positive findings on taxpayer interest in such a system, a pilot was initiated during Filing Season 2024.
During this period, Direct File was available to those with simple tax situations across 12 states. More than 140,000 Americans used it successfully within five weeks of its availability after extensive testing—claiming over $90 million in refunds while saving an estimated $5.6 million on federal returns alone.
User feedback indicated high satisfaction levels; according to a GSA Touchpoints survey of over 11,000 users, 90 percent rated their experience as “Excellent” or “Above Average.” Many users appreciated features that provided insights into different tax situations without hidden fees or upselling attempts during filing.
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