Impact
- Taxpayers who used FileYourStateTaxes reported positive experiences with the tool, with 96% saying they were satisfied or very satisfied.
- 90% of Arizona and New York taxpayers who filed a federal Direct File return went on to complete their state return with FileYourStateTaxes.
- Most taxpayers finished FileYourStateTaxes very quickly. From the time of data transfer from Direct File, 88% of filers completed and submitted their state return within 15 minutes.
The challenge
Filing taxes in America is hard. The forms contain a lot of confusing language, it can be expensive to get help, and there are a lot of fears: people think they could get in trouble with the tax agency if they make a mistake, could owe money in fines, or could miss out on refunds. A more equitable and just tax system would be one where the government takes information it already has and makes it easier for people to file their taxes with confidence and get the return and credits they deserve. In 2023, the Internal Revenue Service (IRS) set out to do just that. The agency announced it would launch Direct File, the first free, public, mobile friendly, electronic tax filing tool in U.S. history. In 2024, its pilot year, Direct File would serve eligible taxpayers in 12 states. It marked a new era in American tax filing—but it wasn’t without challenges. In particular, people who chose to file their federal taxes with Direct File would still have to go through the time-consuming task of separately filing their state taxes. State filing has long been a known challenge of running a public tax filing system in a federalist system. We set out to prove it was a solvable one.
Our approach
With Direct File, the IRS was demonstrating that the government had learned the lessons of the civic technology movement: starting small and iterating leads to better software and an improved client experience. We wanted to take the same approach with our technology to help solve the problem of state tax filing, so we built FileYourStateTaxes, a software that integrates with Direct File. In our pilot year, we worked with two states—Arizona and New York—to allow taxpayers there who chose to use Direct File for their federal taxes to also file their state returns in one seamless, unified experience.
Upon completing the federal return on the IRS website, taxpayers in Arizona and New York were able to export their data from Direct File to FileYourStateTaxes. The state filing tool then asked a few more questions specific to state situations and filed the state tax return. Because most state tax return information is on the federal return, it generally took no more than a few minutes for taxpayers to use FileYourStateTaxes. In fact, from the time of data transfer, 88% of filers completed and submitted their state return within 15 minutes.
We worked with the IRS and state governments to undergo a careful, step-by-step testing effort to make sure that FileYourStateTaxes integrated well with Direct File. Our multi-disciplinary team developed designs with taxpayers and built the technical components of state e-file integration. Throughout this process, we focused on design practices we know make for a better user experience, including:
- Using plain language and transcreation for translations to make tax questions as simple and easy to understand as possible
- Setting clear expectations for the tool to minimize the anxiety taxpayers may experience when filing their taxes
- Offering empathetic live chat support for questions not only about FileYourStateTaxes, but also about Direct File, ID.me, and state payment portals
Outcomes
By eliminating barriers to filing a tax return, Direct File is positioned to help deliver up to $12 billion a year in tax benefits to low-income families—life-changing refundable credits that go unclaimed every year because it is often too hard and too expensive to file a return. FileYourStateTaxes is a critical tool to Direct File’s success, because it builds overall confidence in an easy and reliable tax system. Our research with taxpayers found that nine out of 10 people would recommend Direct File and FileYourStateTaxes to their friends and family, with a Net Promoter Score of 83. Reflecting on the federal-state data transfer, the most unique aspect of Direct File integrated state filing, 95% thought the transfer was “seamless and quick.”
In 2025, Code for America is adding North Carolina, Maryland, New Jersey, and Idaho to the states we’re partnering with on FileYourStateTaxes, and we believe even more states will become enthusiastic partners in the coming years. The fully realized 21st century tax filing system we envision—one with a just, equitable tax system that makes it easy for people to file—won’t be built in a day. But we believe we’re on the right path with Direct File and FileYourStateTaxes, and we’re looking forward to building on this momentum.
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