The average cost of filing a federal tax return with commercial software runs between $150 and $250, according to the National Society of Accountants. For roughly 100 million American households, that expense is entirely optional. The IRS has maintained a free electronic filing program since 2003, and for the most recent tax year on record, anyone with an adjusted gross income of $84,000 or less qualified to prepare and e-file a federal return at zero cost. That threshold covers the majority of individual filers. Yet only a small fraction have ever used the program, and enforcement actions against one of the country’s largest tax-prep companies help explain the gap.
How Free File actually works
The IRS Free File program is a public-private partnership launched in 2003. The agency sets the income ceiling and ground rules; a group of private software companies agrees to let qualifying taxpayers prepare and e-file a federal return without charge. The most recently published AGI limit, $84,000, applied to tax year 2024 returns. The IRS typically updates that figure each January; as of spring 2026, the agency has not publicly announced whether the ceiling will shift for tax year 2025 returns.
Each participating company may layer on its own eligibility filters, such as age, state of residence, or military status, so not every partner accepts every filer. But the core guarantee holds: if you qualify and enter through the program, the federal return costs nothing.
There is one critical catch. You must start at the IRS Free File landing page on IRS.gov and select a partner from there. If you navigate directly to a company’s own website or app, you will land on its standard pricing pages, where the free option may not appear at all. That single navigation choice often determines whether an eligible filer pays or doesn’t.
A newer option: IRS Direct File
In 2024, the IRS launched something it had never offered before: its own tax preparation tool, called Direct File. Unlike the Free File Alliance products built by private companies, Direct File is developed and maintained by the IRS itself. The pilot debuted in 12 states for the 2024 filing season and expanded to 25 states for the 2025 season, though it still handles a narrower range of returns than commercial software. Filers with straightforward W-2 income, the standard deduction, and common credits like the Earned Income Tax Credit are the primary audience.
One important distinction: Direct File does not require you to start at the Free File portal. It has its own entry point and no income cap. But it does not currently prepare state returns, which means filers in states with an income tax may need a separate tool for that piece. Several participating states have built integrations that hand off data from Direct File into their own free state filing systems.
Why millions of eligible filers still pay
Part of the answer is straightforward: most people don’t know the program exists. The IRS publishes the Free File rules on its website, but the agency has never run an advertising campaign anywhere near the scale of what commercial tax-prep brands spend. A Government Accountability Office report published in April 2022 (GAO-22-105236) found that the IRS had not exercised strong oversight of the Free File program and recommended the agency develop additional filing options that carry no fee. The report flagged weaknesses in how the IRS monitored the taxpayer experience within the program. Some of those findings may no longer reflect current conditions, particularly after the launch of Direct File and changes in the Free File Alliance’s membership.
But awareness only explains so much. Federal and state enforcement records show that at least one major provider actively steered eligible customers away from the free path.
The Federal Trade Commission filed an administrative complaint against Intuit Inc., alleging that TurboTax’s marketing of “free” filing was deceptive. According to the complaint, filers who arrived at TurboTax through search engines or direct visits were funneled toward paid tiers rather than informed about the zero-cost IRS Free File product. A federal court ultimately dismissed the FTC’s administrative case in 2024, limiting the commission’s enforcement path.
The stronger enforcement outcome came from the states. California Attorney General Rob Bonta announced a nationwide settlement against Intuit over deceptive advertising of its “free” TurboTax products. The settlement order noted that the IRS Free File product was not listed on TurboTax’s standard pricing pages. Users who could have filed without paying were instead prompted to upgrade for a fee. Intuit left the Free File Alliance in 2021, but the episode exposed a structural vulnerability in the program’s design: when the free option depends on a user finding the right door, companies that profit from the wrong door have little incentive to put up signs.
The state-return gap and how to close it
Even filers who successfully use Free File or Direct File for their federal return can hit an unexpected bill when it comes time to file with their state. Some Free File partners bundle a free state return; others charge for it or don’t offer one at all. Direct File, as noted, does not prepare state returns, though a growing number of states have built their own free tools that accept data from it.
Forty-one states and the District of Columbia levy a personal income tax, so for most filers, the federal return is only half the job. The gap matters because a state-return fee of $30 to $50 can erase much of the savings from filing the federal return for free. Before choosing a Free File partner, check the partner’s details page on IRS.gov to see whether a state return is included. If it is not, search your state’s department of revenue website for a free filing portal. Several states offer their own browser-based tools that accept direct data transfers from IRS Direct File, eliminating the need to re-enter information. Filers who overlook this step may end up paying a third party for a state return that their own state government provides at no charge.
What the public record doesn’t show
No publicly available source provides a precise count of how many people who qualified for Free File paid for commercial software instead during the most recent filing season. The 2022 GAO report included demographic and geographic breakdowns of Free File usage, but only in summary form; raw partner-submitted data on user volume are not public. Post-settlement compliance details from Intuit are also not available in the FTC docket or state settlement documents reviewed for this article. Claims about billions of dollars in unnecessary fees, sometimes cited by consumer advocates, cannot be verified or refuted from the current public record. What is clear is that the gap between eligibility and usage remains wide.
How to file for free between May and June 2026
For anyone preparing a tax year 2025 return during the May to June 2026 filing window, the steps are simple:
- Check your AGI. If your adjusted gross income for 2025 falls at or below the IRS threshold, you likely qualify for Free File. The most recently published ceiling is $84,000. Look at Line 11 of your most recent Form 1040 for a reference point, and check IRS.gov for any updated figure.
- Start at IRS.gov. Go to the IRS Free File page and use the lookup tool to find a partner that matches your situation. Do not start at a commercial brand’s homepage.
- Consider Direct File. If your return is relatively simple (W-2 income, standard deduction, common credits), check whether IRS Direct File supports your state and tax situation. It is free regardless of income.
- Account for your state return. Confirm whether your chosen tool covers your state return. If it doesn’t, look for your state’s own free filing option before paying a third party.
Why the starting point you choose still determines what you pay
The Free File program is, on paper, a generous offer: free federal tax preparation for the vast majority of American households. The policy exists. The software works. The eligibility rules are not complicated. But the program’s design places the entire burden of discovery on the taxpayer, and enforcement records show that at least one dominant player in the market exploited that design for years. The launch of IRS Direct File is the most significant structural change since the program began, giving filers a path that doesn’t depend on a private company’s willingness to surface the free option. Whether Direct File scales fast enough to close the gap is an open question, but for the first time, the IRS controls a tool from end to end. The practical advice hasn’t changed in 20 years: start at IRS.gov, not at a brand’s homepage. That one decision is still worth real money.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
