IRS Changes Could Increase Tax Filing Costs for Millions in 2026

Original: Tax season twist: New IRS changes could make filing more expensive this year

The Economic Times•Apr 1, 20266 min

In a Nutshell

The IRS has discontinued its Direct File program, affecting over 30 million taxpayers who previously filed for free. As a result, average tax preparation costs are expected to rise to $270, with many taxpayers facing additional fees for basic services. This change raises concerns about affordability and accessibility in the U.S. tax system.

Key Points

01The IRS Direct File program, which allowed free filing, has been discontinued for the 2026 tax season.
02Average tax preparation costs are projected to reach $270 per return, significantly impacting middle-income households.
03Many taxpayers will now rely on private tax software, which often incurs additional fees for more complex returns.
04Low- to moderate-income taxpayers and gig workers are among the most affected groups.
05Free filing options still exist but come with limitations, making them harder to navigate.

In-Article Ad

Full Summary

The Internal Revenue Service (IRS) has announced the discontinuation of its Direct File program, which allowed taxpayers to file their returns for free. This decision affects over 30 million taxpayers who previously utilized the service, leading to concerns about rising costs and accessibility. Average tax preparation expenses are expected to increase to $270, with many individuals now needing to rely on private tax software that charges fees for anything beyond basic returns. This shift particularly impacts middle-income households, who may earn too much to qualify for free programs yet find paid services expensive. Critics argue that this change benefits the commercial tax preparation industry at the expense of taxpayers, while supporters cite cost efficiency as a reason for the decision. Although some free filing options remain, such as the IRS Free File program and Volunteer Income Tax Assistance (VITA), they come with various limitations that can complicate the filing process for many.

Key Figures

$270

Average tax preparation cost per return

30 million

Taxpayers affected by the end of the Direct File program

In-Article Ad

Why It Matters

The discontinuation of the Direct File program means taxpayers may face higher costs when filing their taxes, which could strain household budgets, especially for middle-income earners.

Who is affected

Middle-income households, low- to moderate-income taxpayers, gig workers, and first-time filers.

What to know

Taxpayers should explore available free filing options and plan early to minimize costs.

FAQ

Yes, filing your taxes could cost more due to the discontinuation of the Direct File program, which removes a completely free government option.

You can use IRS Free File if you meet income eligibility requirements or opt for Free File Fillable Forms if you're comfortable preparing returns manually.

Read the original article →