Introducing our Free Tool to File State Taxes Online

FileYourStateTaxes allows people in Arizona and New York to easily file their state taxes online, alongside the IRS Direct File tool for federal taxes

Last May, when the Internal Revenue Service (IRS) announced it would launch Direct File, the first free, public, electronic tax filing tool in U.S. history, we called it the beginning of a sea change in the tax system. Just ten months later, that change is already becoming real: today, after weeks of scaled testing, Direct File officially launches for millions of eligible taxpayers in 12 states.

At Code for America, this is a momentous day for two reasons. First, our team believes in a future where every person receives the flexible cash they deserve from the tax system, and where accessing those tax benefits is easy, dignified, and mostly automatic. A free public tax filing system, with the potential to leverage IRS taxpayer data, is the centerpiece of this new system.

Second, we are thrilled to officially launch our companion tool, FileYourStateTaxes, the state tax filing software that integrates with Direct File, and allows Arizonans and New Yorkers who use Direct File to also file their state returns in one seamless, unified experience. State filing has always been one of the biggest challenges for a Direct File project to solve. With FileYourStateTaxes, we are helping demonstrate a viable, long-term solution.

This filing season, as the IRS has repeatedly said, is a pilot year. Direct File—and FileYourStateTaxes—will prove this year that streamlined, public tax filing is possible, popular, and powerful. The coming years will build on that promise to create the truly human-centered tax filing system of the 21st century.

Starting small and iterating is government technology done right

With Direct File, the IRS is powerfully demonstrating that the government has learned the lessons of the civic technology movement: starting small and iterating will lead to better software and an improved client experience.

Over the last several weeks, Direct File and FileYourStateTaxes have undergone a careful, step-by-step testing effort, slowly expanding availability to more and more test users with increasingly more complicated situations. With this scaled launch, analogous to similar software launches in the private sector, Direct File has confirmed the product that’s now available to millions of Americans is ready for prime time.

The Direct File product available in 2024, though, is just step one. Rather than wait for years and launch a tax filing product that meets every taxpayer’s needs, the IRS wisely chose to start small, with a restricted scope covering only some of the most common tax situations. Even so, about 30% of taxpayers are estimated to be eligible for Direct File 2024—with a special emphasis on families with low income claiming the Earned Income Tax Credit, and an emphasis on accessibility (including for Spanish speakers and people who access the internet on mobile phones). New technology works best when it starts with a limited scope, and, with the right limited scope. Direct File is doing both.

New technology works best when it starts with a limited scope, and, with the right limited scope. Direct File is doing both.

Not only can Direct File scale to cover additional tax situations in coming years, it can also evolve to further streamline the tax filing process. The IRS has made clear its intention to streamline taxpayers’ access to their own data, and has documented that taxpayers expect a Direct File tool to automate data the IRS already has access to. In the coming years, if and when Direct File expands, we expect it to provide this pre-population functionality, finally ending the days when taxpayers must track down and transcribe their own tax documents, and eradicating the single largest barrier to accessing tax benefits for families with low income. In the future, driven by Direct File, we can—and will—finally close the EITC and CTC coverage gaps, giving every family access to the benefits they deserve.

Finally, Direct File is of course only available in states that were ready to support it in year one—and we’re thrilled to be supporting two states, Arizona and New York, who have stepped up to the plate in this pivotal year.

Proving that integrated state filing is possible—and others can do it, too

State filing has long been a known challenge of running a public tax filing system in a federalist system. In 2024, we are proving it’s solvable.

Shortly after the Direct File announcement in May, the IRS began discussing its strategy to support state filing. After finishing Direct File, taxpayers would be redirected to an integrated state filing tool, where they would be able to import all the data they entered into Direct File. Done right, such a state filing tool would have to ask only a few additional questions and take a few minutes to complete.  We were eager to take on the challenge.

Over the last six months, our multi-disciplinary team has been hard at work—determining scope with our partners, developing and testing designs with taxpayers, building the technical components of state e-file integration. The result is FileYourStateTaxes. 

Watch a demo of FileYourStateTaxes in action!

Doing a state return with FileYourStateTaxes generally takes a few minutes, even for returns that claim half a dozen different state and local credits. Like all Code for America products, FileYourStateTaxes is bilingual and mobile first, written in plain language, and provides live chat assistance with actual humans on every page. 

From the work in our partnerships with Arizona and New York so far, we believe states across the country are poised to jump on this opportunity and join Direct File in the coming years. Most state revenue departments have long recognized the critical importance of providing free, public, direct filing; two dozen states around the country already provide such services at the state level. We believe more states will be enthusiastic partners in integrating with Direct File in the next few years.

2024 and beyond

For now, all of that is in the future. Our task in the next month is to make sure taxpayers know about this free and promising new option, and to make sure every taxpayer who uses it has a seamless, positive experience. To get the word out, we’re proud to be founding members of the Coalition for Free and Fair Filing, a group of organizations across the country committed to Direct File, and will be helping spread the word in collaboration with organizations, government agencies, and elected officials across the country.

The fully realized 21st century tax filing system won’t be built in a day. But we believe we’ll look back on this moment as the day that transformation began.

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