Maryland Joins IRS Direct File Program For 2025

By Sam Janesch
Baltimore Sun
(TNS)

Marylanders who have relatively straightforward tax returns will have the chance to ditch independent—and sometimes costly—tax preparers and instead file their federal taxes directly with the IRS for free in 2025, state and federal officials said Wednesday.

The new “direct file” system launched as a pilot program earlier this year and Maryland is one of the first states that will make it available during its permanent expansion.

About 700,000 filers in Maryland are expected to be able to use the service, though the final eligibility requirements are not settled, Comptroller Brooke Lierman said.

Lierman called it a “game-changer” when it costs, on average, $110 and 10 hours of time for individuals to file their annual returns.

“It’s unacceptable that Marylanders should have to pay any portion whatsoever of their refund or paycheck to fulfill a mandatory requirement like filing tax returns,” Lierman said in Annapolis on Wednesday alongside a slate of Maryland Democratic officials and U.S. Treasury Deputy Secretary Wally Adeyemo.

The program may expand in the future but will be initially open to those who have “relatively simple” returns, the officials said.

According to the comptroller’s office, that will likely mean full-time Maryland residents whose income comes primarily from W-2 employment, who use the standard deduction and who claim common credits and subtractions.

Adeyemo said the goal is “to make sure that every middle-class American and working-class American are able to use direct file to file their taxes for free.”

“By being able to use direct file, it means that you’re going to get your tax refund far faster,” Adeyemo said.

For nonprofit leaders like Robin McKinney who help lower-income workers with their taxes, it could mean a load off their backs and the ability to help more people who seek their services.

The CASH Campaign of Maryland, which McKinney co-founded and serves as CEO, offers tax assistance for thousands of people who make up to $65,000, though most are individuals who earn less than $20,000.

“Every year we are in this supply-and-demand crunch, and so what direct file allows us to do is to be able to have a triage for the people that don’t really need us, [but] they just can’t afford to pay,” McKinney said in an interview after attending the announcement Wednesday. “Because that’s a big chunk of who we see, are people that just can’t afford it, but they could do it on their own.”

The program launched in 12 states this year and saved 140,000 taxpayers about $5.6 million in filing costs, according to the Internal Revenue Service.

It was created through the Inflation Reduction Act in 2022, which provided $80 billion more for the IRS to improve customer service, technology and auditing practices for tax evaders.

U.S. Sen. Chris Van Hollen, a Maryland Democrat, stressed the need to continue funding the free filing program, its expansion and the rest of the IRS reforms. He pointed to House Republicans’ attempts to end the program and tax filing companies’ lobbying efforts against a new government-run alternative.

“There is a risk directly targeted against the direct file system,” said Van Hollen, who is on the Appropriations Committee and chairs its Subcommittee on Financial Services and General Government.

“This is an ongoing battle to protect taxpayers,” he said.

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