LANSING — The end of a federal free tax filing program is expected to cost families nationwide billions of dollars, according to a new analysis.
The IRS Direct File tool, created under the Inflation Reduction Act, allowed eligible taxpayers earning up to about $120,000 a year to file federal returns for free using a simplified system. Michigan never opted into the program.
Analysts estimate the state is missing out on nearly $600 million a year in potential savings after the program was ended. Nationally, supporters say the tool could have saved taxpayers billions in filing fees, time, and unclaimed tax credits.
Federal officials said the program was ended due to cost concerns and limited use, arguing private companies could handle tax filing services.
Advocates counter that most “free” private filing options result in added fees and say low-income filers now face fewer affordable choices.