Core Points - The IRS has discontinued its Direct File program, which allowed taxpayers in certain states to file federal tax returns online for free directly with the federal government [1][3] - The program was initially launched in 2024 and was available to approximately 30 million taxpayers in 25 states, with nearly 300,000 returns filed during its operation [1][2] - The decision to suspend Direct File was influenced by low participation rates and high operational costs, as noted in a Treasury Department report [2][3] Industry Impact - The termination of Direct File is seen as a win for private tax preparation companies, which viewed the program as a threat to their business model [3][6] - The existing Free File program, which partners with private tax preparation firms, is limited to taxpayers with an adjusted gross income of $84,000 or less, and some users have reported unexpected fees despite qualifying for free services [7] - Direct File had reportedly saved users an average of $160 in filing fees, highlighting the financial impact on taxpayers now that the program has been discontinued [7]