IRS gets free tax-filing tool; private companies lose captive market
H.R. 7806 — Direct File Act of 2026 · Filed by Brad Sherman (D-CA) · 126 cosponsors · Introduced Mar 4, 2026 · Referred to committee
Your members of Congress
Enter a ZIP to see where your representative and both senators stood on this bill.
Looked up on this device — your ZIP is never stored on our servers.
What it does
This bill creates a free, government-run tax filing service that lets ordinary Americans prepare and file their federal income tax returns online without paying a private tax company. It also voids any contracts that prevent the IRS from offering this service, and allows states to integrate their own tax filing into the same system. The bill requires the IRS to make the service accessible, user-friendly, and widely promoted.
Why we flagged it
The bill's core function is to establish and codify a free, government-operated tax preparation and filing program. It is fundamentally a public service expansion, not a tax policy change or appropriation rider.
What the text implies
- The prohibition on restrictive agreements (Section 2) voids existing contracts between the IRS and private tax software companies, potentially disrupting current partnerships and forcing renegotiation or termination.
- The $1 million per-state grant program for state tax integration creates a new federal spending stream that may incentivize states to participate, shifting tax administration toward a centralized federal platform.
The full analysis lists 5 implications of this text.
Who stands to gain
Individual taxpayers (reduced/eliminated filing costs); Low-income and underserved populations (improved access)