2026 Tax Season: “I Filed for Free with IRS Direct File Last Year — Why Is It Gone Now?”
“Last year I filed my taxes directly on the IRS website for free — why can’t I find that option in 2026?”
If you personally used IRS Direct File during the 2025 filing season, it’s natural to assume it would continue.
However, for the 2026 filing season (2025 income), Direct File is no longer being offered to the general public.
This sudden change has left many taxpayers wondering whether free filing is officially over.
The good news: even without Direct File, legitimate free or very low-cost filing options still exist.
Below is a clear, EA-level breakdown of what changed — and what you can safely use instead.
- 1️⃣ Why IRS Direct File Isn’t Available in 2026
- 2️⃣ Three Free Filing Alternatives Still Available in 2026
- 3️⃣ New York Filers: Hidden State Filing Cost Traps
- 4️⃣ Why Investment Income Can Affect Both Taxes and Health Insurance
- 5️⃣ DIY Filing vs. When a Professional Review Makes Sense
- 6️⃣ Three Most-Asked Google Questions
1️⃣ Why IRS Direct File Isn’t Available in 2026
IRS Direct File began as a pilot program in 2024 and expanded to additional states during the 2025 filing season.
It was never guaranteed as a permanent service.
Based on official announcements and IRS guidance, Direct File is not being offered for the 2026 filing season.
- Direct File was a seasonal, policy-dependent program — not a permanent IRS platform
- For 2026, taxpayers should assume it is unavailable and plan around other IRS-approved options
2️⃣ Three Free Filing Alternatives Still Available in 2026
The end of Direct File does not mean the end of free filing.
In real-world practice, these are the three most reliable alternatives for the 2026 season.
| Option | Who It’s For | Main Benefit | Important Caveat |
|---|---|---|---|
| IRS Free File | Taxpayers under IRS income limits | Free federal filing via trusted software partners | Must start from the official IRS Free File page |
| VITA | Generally low- to moderate-income filers | In-person assistance at no cost | Income limits and scope vary by location |
| TCE | Primarily age 60+ | Senior-focused tax help | Appointments and documentation required |
- The AGI threshold is determined each season and can change annually.
- Example: IRS may publish a limit such as $84,000 or less — always verify for your filing year.
A New York filer completed their federal return for free but suddenly saw a payment screen.
In most cases, this happens because:
(1) the filing did not start from the IRS Free File portal, or
(2) the state return was not included for free.
The fix is simple: restart through the official IRS Free File page and confirm state pricing before submitting.
3️⃣ New York Filers: Hidden State Filing Cost Traps
Many Direct File users previously filed federal and state returns together.
When switching to Free File software, it’s common to see:
“Federal is free — why is New York charging me?”
- Free federal filing does not guarantee free NY state filing.
- Always identify whether charges are for state filing or optional upgrades.
- New York filers may have both NYS and NYC components.
4️⃣ Why Investment Income Affects Taxes and Health Insurance
One of the most common surprises in 2026 filings is:
“My stock gains were one-time — why did my health insurance change?”
The answer is straightforward: capital gains increase MAGI.
In New York, health coverage tiers and ACA subsidies are highly income-sensitive.
Even temporary investment income can affect eligibility and premium tax credit reconciliation.
- Capital gains, dividends, and interest affect both tax and insurance calculations.
- Free tools calculate tax correctly but may not flag insurance consequences.
5️⃣ DIY Filing vs. When Professional Review Is Smart
- W-2 wages only
- Standard deduction
- No investments, crypto, rental, or business income
- 1099-B stock sales, options, or crypto activity
- Self-employment, LLC, or S-Corp income
- ACA subsidies, Medicaid, or Essential Plan eligibility
If your 1099-B has dozens of transactions, accuracy depends on correct basis and holding-period classification.
If ACA coverage is involved, MAGI errors can trigger subsidy repayment.
6️⃣ Three Most-Asked Google Questions
Yes. For the 2026 filing season, Direct File is not generally accessible.
IRS Free File or VITA/TCE should be used instead.
Q2. Does IRS Free File guarantee free New York state filing?
No. Federal filing may be free while state filing is not.
Always confirm costs before submission.
Q3. Can small investment gains affect ACA or Medicaid?
Yes. Capital gains flow into MAGI and may impact eligibility or subsidy reconciliation.
In 2026, the real issue isn’t free vs. paid software — it’s whether your filing properly reflects investments and insurance-related income.
This article is based on U.S. federal tax law and general guidance.
State rules and individual facts may vary. This content is informational only and does not constitute tax advice.