Mainers will be able to file their federal taxes online for free starting in the 2025 tax season.
The Internal Revenue Service piloted a Direct File system allowing free online filing last tax season, and while Maine was not one of the 12 states that piloted the program, state officials confirmed Maine will opt into the system when it becomes available to all states and Washington D.C.
Direct File, which the Inflation Reduction Act gave the IRS the funding to develop, is currently restricted to taxpayers with the most common tax situations.
Mainers will have to file state returns separately, however Maine Revenue Services has allowed residents to file state income taxes for free online since 2001, said Anya Trundy, chief of legislative and strategic operations for the Maine Department of Administrative and Financial Services.
Maine Revenue Services rolled out a tax portal last filing season to replace an older system for individuals to file their income tax returns. The state is also working with the IRS to fully integrate Direct File and the new Maine Tax Portal, with a goal of integration by 2026, Trundy said.
“This will enable taxpayers to have their information automatically transferred from their completed federal return to begin their Maine return,” Trundy said.
In the meantime, Trundy said Direct File is expected to spare Mainers tax preparation filing fees and help them claim the federal tax credits they are eligible for.
According to a report from the Economic Security Project, Direct File could deliver $79.9 million in total value to Maine taxpayers, between filing fees, time cost of filing, and additional federal credits claimed.
During the pilot program, Direct File issued more than $90 million in tax refunds and collected $35 million in tax balances due. Overall, the U.S. Treasury Department estimated that Direct File users saved $5.6 million in tax preparation fees.
Maura Pillsbury, state and local tax policy analyst for the progressive Maine Center on Economic Policy, who had previously called on Gov. Janet Mills’ administration to join Direct File, praised the decision.
“This is a big win for tax fairness and will save Mainers tens of millions of dollars in filing fees and unclaimed tax credits,” Pillsbury wrote in a statement. “Direct File will empower Maine taxpayers [to] get the refunds they’re entitled to and make filing their taxes so much easier.”
In a July blog post, Pillsbury pointed to data that shows less than 3% of tax filers file for free, despite an estimated 70% being eligible to do so. Pillsbury also cited findings that the for-profit tax preparation industry exploits the most vulnerable taxpayers, specifically low-income and Black and brown communities.
Direct File is not intended to replace tax professionals or commercial software providers, according to the IRS.
