Donald Trump discontinued the federal Direct File program, a free online tax preparation service, citing relatively low usage. The move eliminated a no-cost filing option that some taxpayers had used to avoid private tax preparation fees.
In response, New Jersey introduced a similar filing option for residents and certain non-residents. While partnering with the federal Direct File system, the state reported that approximately 8,700 taxpayers collectively saved at least $1.4 million in preparation fees and received roughly $4 million in refunds.
Before the federal program was discontinued, about 400,000 taxpayers nationwide had used the service.
While I agree this should be taught in school, you can find the information online. Why is it hidden? One answer is tax software corporations lobby the government and the GOP goes along with them. E.g., Trump eliminated the IRS direct file. https://t.co/7dDNv6449N
— Lincoln Michel (@TheLincoln) February 17, 2026
Critics have voiced their dissatisfaction with the curbing of the system. A lot of people believed the Direct File was on the cusp of taking off, and that it was aborted without long-term thought. New Jersey’s own acting treasurer, Aaron Binder, said, “That partnership had worked really well,” Binder said. “It was just kind of getting off the ground. It was really in its infancy of success.”
New Jersey’s own online system is not unlike what Direct File offered, and the state has encouraged its citizens to use it in tax preparation. 97% of users who used the system said that they were satisfied with the product, according to the Innovation Authority.
Direct File was a very versatile system that should have stayed on a little longer. It was part of Biden’s Inflation Reduction Act in 2022. The IRS rolled it out in 2024, before massively expanding it in 2025. The program was very much in its infancy when it was chopped.
Donald Trump’s administration was keen on making a case against the program. It argued that other free commercial tax prep programs could assist citizens. It also argued the IRS itself maintained programs like Free File, which were a lot cheaper to keep up and running.
As tax filing season starts, remember Trump made filing harder and more expensive.
He slashed IRS staff and reduced its budget.
He canceled Direct File, which let you file your taxes for free.
Trump wants the IRS to work for billionaires and giant tax prep companies, not you.
— Elizabeth Warren (@ewarren) February 17, 2026
However, these channels of tax preparation have received their fair share of criticisms. Advocacy groups like the Center on Budget and Policy Priorities have pointed out in their reports that the cutting of Direct File was a mistake. They said, “There is good reason to be skeptical of the Administration’s plan to rely on commercial tax preparation companies to provide free filing options, as it is likely, and not surprising, that these firms’ for-profit motives will overshadow their commitment to helping taxpayers file for free,”
Whether New Jersey’s online portal can fill the niche left behind by Direct File is still up for debate.
