IRS Cancels Free Tax Filing: Alternate Options for Oregonians

The nationwide free e-filing program for federal income taxes will no longer be offered by the federal government in 2026, as decided by the Trump administration. However, Oregon officials assure that local residents can still utilize comparable facilities both online and offline.

The Oregon Department of Revenue was notified of the change via an email from the Internal Revenue Service (IRS) last week, states agency spokesperson Robin Maxey. This news followed the department’s call in August for tax payers to participate in an official national survey assessing the effectiveness of the online tax filing scheme introduced under the Biden administration.

Oregon was among 25 states that collaborated with the IRS to launch an online pilot that allowed taxpayers to file their federal income taxes directly. The program was used by roughly 4,700 Oregonians this year. Additionally, nearly 14,000 people used Oregon’s own Direct File Oregon system to file their state income taxes.

In a statement, David Gerstenfeld, director of the Oregon Department of Revenue, confirmed that Direct File Oregon will continue to be available in 2026. “Oregon still has several options for electronically filing both their federal and state income tax returns for free,” Gerstenfeld stated. Direct File Oregon can be used in combination with commercial software, income-based free software programs, and free fillable forms, which are accessible to every taxpayer regardless of their income level.

For years, billions of dollars have been paid by Americans to private, for-profit tax preparation companies due to lack of a free government program. Historically, the IRS has partnered with private companies to offer the “Free File” program, a subsidized filing service for low and middle-income taxpayers. However, ProPublica reported in 2022 that some of these companies misled customers into paying for free services.

In response, Congress allocated $15 million to the IRS in the 2022 Inflation Reduction Act to explore options for creating a free system. By 2023, the agency had developed a report that led to the 2024 direct e-filing pilot. But, the GOP’s summer tax and spending law requested IRS officials to evaluate the costs of enhancing and establishing public-private partnerships, and the costs of replacing any direct e-file programs managed by the IRS. A previous version of the GOP’s legislation proposed to eliminate the program entirely.

The Trump administration and Treasury Secretary Scott Bessent were accused by U.S. Senator Ron Wyden, an Oregon Democrat and ranking member of the U.S. Senate Committee on Finance, of dismantling the team that managed the direct file program. According to him, the results of the study were predetermined and the report itself was rigged. “I wrote the bill that created Direct File because the existing free options were insufficient and the big tax prep companies had been caught red-handed using deceptive practices to scam taxpayers into overpaying,” Wyden stated, criticizing the Trump administration for threatening any public service that saves Americans time, money, and hassle.

The Oregon Department of Revenue spokesperson, Maxey, reassured taxpayers that they can use Direct File Oregon along with federal filing options to complete their 2024 returns this year. The agency does not endorse specific programs but they have put together a list of free tax preparation services and approved commercial options like H&R Block, TaxHawk.com, 1040Now, CashApp and FileYourTaxes.com.

Here are some of the free filing options:

• The American Association of Retired Persons Foundation Tax-Aide program is a free service aimed at low and middle-income individuals aged 50 or older.
• The Volunteer Income Tax Assistance program offers free help to individuals earning less than $60,000 per year, those with disabilities, and those with limited English proficiency. The IRS offers a list of locations for these program sites on its webpage.
• The Portland-based nonprofit Metropolitan Family Service runs a Creating Assets, Savings and Hope program which offers a dozen free volunteer tax sites in the Portland and Eugene metropolitan areas, along with virtual options. The program is primarily directed towards low to moderate-income working families and individuals, and it provides culturally responsive outreach.
• The Oregon Taxpayer Advocate Office provides an interactive map of free tax preparation sites as of 2024 on the revenue department’s website, but they caution that these appointments often get booked quickly.

The direct e-filing program was previously described by IRS officials as a tool that helps taxpayers navigate the complexities of the nation’s tax code, promising accurate estimates of refunds or taxes owed, as well as transparency in its calculations.