Coloradans won’t be able to access a free federal online tax return-filing tool this upcoming tax season after the Trump administration halted its rollout, a move Gov. Jared Polis lamented Wednesday as a costly disappointment.
Polis asked the federal government to reconsider the decision in a letter sent Wednesday to U.S. Treasury Secretary Scott Bessent. The program, known as IRS Direct File, allowed users to file their taxes with pre-filled tax forms, such as W-2s, free of cost. It’s had a limited rollout since 2024, with Colorado slated to join the program this coming year.
In his letter, Polis highlighted a report that found 94% of users said the experience with the federal tool was “above average” or “excellent.” In Colorado, it was expected to save taxpayers $140 million per year while helping them to secure $80 million in federal tax credits, according to a report by the Economic Security Project, while saving individuals hours of work.
“Direct File offered a free, efficient alternative that saved taxpayers both time and money, making government more efficient and reducing taxpayer errors,” Polis wrote in his letter to Bessent. “… There is no substitute for Direct File and we urge Treasury to look again at the results and reconsider their decision, given how successful direct file was.”
The Direct File program was created as part of the Inflation Reduction Act signed into law by former President Joe Biden in 2022. The program immediately faced intense blowback from Republican lawmakers and commercial tax preparation companies, who complained that it wasted taxpayer money by replicating existing private-sector services. Several companies offer free filing services, though they make billions from complicated tax filing services.
In 2024, the program’s first year, about 141,000 taxpayers across eight states filed their taxes through the program, out of about 423,000 who logged into the service. This year, the number of filers increased to about 297,000 taxpayers in 25 states out of 751,000 who logged into the services, though Polis notes that happened despite uncertainty over the program and no marketing budget for it.
The federal decision doesn’t affect Colorado’s existing program to file individual state income taxes for free.
The Associated Press contributed to this report.
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