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Congress·In Committee·S. 3948

Sen. Warren Introduces Bill to Make Free IRS Direct File Program Permanent

Direct File Act of 2026

19 days ago·View on Congress.gov

Legislative Progress

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Key Points

  • This bill would permanently require the IRS to run a free online system where people can prepare and file their federal income taxes without paying for private tax software. The program must be owned by the federal government and cannot charge any fees.

    From policy text

    “The Secretary shall establish and operate a program under which taxpayers may prepare and file individual income tax returns online.”
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  • The system would work like an interview, asking plain-language questions and automatically pulling in data the IRS already has — like W-2 income — to make filing easier. It must be mobile-friendly, available in multiple languages, and meet federal accessibility standards.

    From policy text

    “be user-tested and employ an interview-based filing system through which the taxpayer answers applicable questions and the relevant information is automatically input into their income tax return”
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  • By 2028, at least 50% of taxpayers in participating states must be eligible to use the free service. States that integrate their own tax filing with the federal system — or that don't have a state income tax — count as participating states.

    From policy text

    “For any taxable years beginning after 2027, not less than 50 percent of taxpayers residing in participating States shall be eligible to use the program described in subsection (a), and the Secretary shall continue to expand eligibility for such program to the maximum extent possible.”
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  • The bill offers $1 million grants to each participating state to help them build a system that lets people file their state and federal taxes together in one seamless process.

    From policy text

    “A participating State described in subsection (b)(2)(B)(i) shall be eligible to receive $1,000,000 under the grant program described in paragraph (1)(B) if such participating State can demonstrate to the Secretary (pursuant to such criteria as the Secretary determines appropriate) that the State tax return filing functionality satisfies standards which are similar to the standards established for the program described in subsection (a).”
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  • The bill bans the IRS from entering into any future agreements that prevent it from offering free tax preparation services, and voids any existing such agreements within 30 days of enactment. This directly targets past deals like the IRS Free File agreement with private tax software companies.
  • Information returns (like W-2s and 1099s) would need to be filed earlier so the IRS has taxpayer data ready to import into Direct File. The program is authorized for funding through fiscal year 2035.

    From policy text

    “There is authorized to be appropriated to carry out the amendments made by this section such sums as may be necessary for the period of fiscal years 2026 through 2035.”
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Impact Analysis

Personal Impact

Scores: 1 = low, 5 = highSentiment: -5 to +5 (net benefit)

Milestones

2 milestones2 actions
Feb 26, 2026Senate

Read twice and referred to the Committee on Finance.

Feb 26, 2026

Introduced in Senate

Source Information

Document Type

Congressional Bill

Official Title

Direct File Act of 2026

Bill NumberS 3948
Congress119th Congress
ChamberSenate
Latest ActionRead twice and referred to the Committee on Finance.

Sponsor

Cosponsors

(40)
D: 38I: 2

Analysis generated by AI. Always verify with official sources.