IRS Direct File won’t be available for the 2026 tax filing season. The IRS notified 25 participating states on Monday that the free online tax filing service has no planned launch date for the future. This decision creates a large market opening for tax preparation firms to acquire hundreds of thousands of new clients who previously relied on the government’s free filing tool.

The announcement came via email¹ from IRS official Cynthia Noe, who confirmed that “IRS Direct File will not be available in Filing Season 2026.” The program, launched as a pilot during the Biden administration, allowed eligible taxpayers to prepare and file federal income tax returns directly with the IRS at no cost. Treasury Secretary Scott Bessent told reporters that “better alternatives” exist to Direct File.

This development hands tax preparation professionals a clear opening to win clients who will now need to find alternatives. Here is what firms need to know about this opening and how to position their services to win this business.

Table of Contents

• The Market Opening: 296,531 Taxpayers Need New Solutions
• Why the Program Ended: Political and Industry Context
• Identifying Your Clients from the Direct File Pool
• Seven Methods to Acquire Former Direct File Users
  • 1. Launch a “Direct File Alternative” Marketing Campaign
  • 2. Introduce Competitive Pricing for Simple Returns
  • 3. Build a Referral Program to Tap Word-of-Mouth
  • 4. Use Local SEO to Capture “Near Me” Searches
  • 5. Use Direct Mail to Reach Specific ZIP Codes
  • 6. Partner with Financial Advisors and Employers
  • 7. Offer Free Consultations to Lower Barriers
• When to Act: Timeline Matters
• Tools to Support Client Acquisition
• Why This Opening Won’t Last Forever

The Market Opening: 296,531 Taxpayers Need New Solutions

Direct File served 296,531 taxpayers during the 2025 filing season, up from 140,803 in the 2024 pilot year. These users filed accepted returns and gave the service high marks: 94% described their experience as “excellent” or “above average,” according to GAO analysis².

The program expanded from 12 states in 2024 to 25 states in 2025, with an estimated 30 million taxpayers eligible³ to use the service across participating states. This means the addressable market extends well beyond the current users to include millions more who qualified but had not yet adopted the tool.

Let’s break down the client demographics. The average Direct File user was 33 years old². These are working professionals in the early-to-mid stages of their careers. According to Treasury Department analysis⁴, Direct File users had diverse income levels, with a significant portion being price-sensitive filers. Among accepted returns, 72% resulted in tax refunds totaling approximately $90.4 million, while 24% owed taxes to the IRS.

Direct File served taxpayers with simple returns. The tool supported common scenarios like W-2 income, standard deductions, Earned Income Tax Credit claims, and Child Tax Credit claims. The service did not handle more complex situations such as business income, investment income, or itemized deductions.

Survey data from December 2024 shows strong public interest in free government filing options. About 73% of tax filers⁵ reported they would be somewhat or very interested in using Direct File if they had access to it. This indicates demand for affordable tax preparation extends far beyond current users.

Why the Program Ended: Political and Industry Context

Tax preparation companies lobbied against Direct File since its inception. Private firms spent millions on lobbying Congress and agencies to oppose the program. An Intuit spokesman⁶, whose company makes TurboTax, called Direct File “a solution in search of a problem, a drain on IRS resources and a waste of taxpayer dollars.”

Republican lawmakers also opposed the program, with multiple representatives asking the Trump administration to eliminate it. The program’s end represents a win for the commercial tax preparation industry, which had advocated for its termination since the pilot began.

Professional tax preparers typically charge $150 to over $500 depending on return complexity. For taxpayers with simple returns who previously used Direct File for free, this cost now becomes a necessary expense. The ending of Direct File removes the zero-cost option from the market.

Taxpayers who used Direct File will no longer be able to access their returns through the platform. The IRS directed former users to access return summaries through their IRS online accounts or to submit Form 4506 to request full copies by mail.

Identifying Your Clients from the Direct File Pool

The Direct File user base breaks into several distinct segments that tax firms should consider when crafting acquisition plans:

Young professionals (average age 33): These clients likely have simple W-2 income and standard deductions. They value convenience and digital-first experiences. Many work in tech, education, healthcare, or professional services. This group expects online filing options, quick turnaround, and mobile-friendly communication.

Low-to-moderate income filers (24% below poverty line): Price sensitivity powers decision-making for this segment. They need affordable options but often qualify for credits like EITC and Child Tax Credit that can result in meaningful refunds. These clients benefit from preparers who can identify all eligible credits and maximize refunds.

Refund recipients (72% of users): Most Direct File users received refunds averaging around $305 based on the $90.4 million distributed across 296,531 returns. Refund anticipation loans or rapid refund products may appeal to this group. Marketing should focus on maximizing refunds and fast processing.

First-time filers and simple returns: Direct File attracted people who found the service accessible and easy to use. These clients want simplicity, not complex tax planning. They need clear explanations, transparent pricing, and minimal hassle.

Digital-native users: Direct File operated entirely online. Users in this pool expect digital intake, electronic signatures, cloud storage of documents, and portal-based communication. Firms still relying on in-person meetings and paper documents may struggle to convert these clients.

Seven Methods to Acquire Former Direct File Users

Tax preparation firms need to act quickly to capture this market before competitors. The 2026 filing season starts in just a few months, and positioning must happen now. Here are seven proven methods to acquire these clients.

1. Launch a “Direct File Alternative” Marketing Campaign

Brand your firm as the natural next step for former Direct File users. Create dedicated landing pages for “Direct File alternative” and “free Direct File replacement” searches. These pages should acknowledge the program’s end, validate user frustration, and present your firm as the solution.

Messaging should focus on what former Direct File users care about: simplicity, affordability, and digital convenience. Show flat-rate pricing for simple returns, user-friendly online filing, and quick turnarounds. Use testimonials from clients with similar profiles: young professionals, simple W-2 income, standard deductions.

SEO content around “what happened to Direct File” and “IRS Direct File alternatives 2026” will capture search traffic from confused users looking for information. Publish blog posts, create FAQ pages, and update your homepage with timely information about the program’s end.

2. Introduce Competitive Pricing for Simple Returns

Former Direct File users paid zero. Asking them to pay $300-500 will create sticker shock. Competitive pricing for simple returns removes this barrier.

Consider a tiered pricing model: $49-99 for basic W-2 returns with standard deductions, $149-199 for returns with common credits (EITC, Child Tax Credit), and $249+ for more complex situations. Clearly define what qualifies for each tier so clients self-select appropriately.

Offer first-year discounts or promotional pricing for new clients. “First return for $29” or “50% off your first filing” can overcome initial price resistance and convert users into long-term clients. Once clients experience quality service, many will return at full price in future years.

Transparency matters. Former Direct File users appreciated seeing exactly what they would pay upfront. Display pricing clearly on your website, in ads, and in all marketing materials. Hidden fees or surprise charges will push these price-conscious clients to competitors.

3. Build a Referral Program to Tap Word-of-Mouth

Referrals power client acquisition in tax practices. Research shows 92% of consumers trust recommendations⁷ from friends and family over advertising. Former Direct File users will ask each other, “Where are you filing now?” Your existing clients should refer your firm.

Create a structured referral program with clear rewards. Offer $25-50 account credits, percentage discounts on next year’s filing, or cash bonuses for each successful referral. Make the program easy to use: provide clients with unique referral links, shareable social posts, or email templates they can forward.

Focus on your best clients first. People who had smooth experiences, received maximum refunds, or appreciated your service will make the most enthusiastic advocates. Ask for referrals immediately after filing when satisfaction is highest.

Track referrals carefully. Use CRM systems or spreadsheets to monitor who referred whom, when referrals convert, and which clients generate the most new business. This data helps you refine rewards and recognize your top advocates.

4. Use Local SEO to Capture “Near Me” Searches

Former Direct File users will search for local alternatives. “Tax preparer near me” and “affordable tax filing [city name]” will see increased volume this season. Local SEO positions your firm to capture this traffic.

Start with your Google Business Profile. Verify your business name, address, and phone number are accurate and consistent across all online directories. Add high-quality photos of your office, staff, and services. Post regular updates about tax deadlines, filing tips, and seasonal promotions.

Encourage reviews from satisfied clients. Eighty-one percent of consumers use Google Reviews⁸ to evaluate businesses. Ask happy clients to leave reviews immediately after filing. Respond to all reviews, both positive and negative, to show you care about client feedback.

Create location-specific content on your website. If you serve multiple cities or neighborhoods, build dedicated pages for each location with locally relevant information. Include local landmarks, address neighborhood-specific tax concerns, and mention community involvement.

Build local citations. List your firm in directories like Yelp, Yellow Pages, Better Business Bureau, and industry-specific sites like the National Association of Tax Professionals directory. Consistent NAP (name, address, phone) information across these sites improves local search rankings.

5. Use Direct Mail to Reach Specific ZIP Codes

Direct mail remains one of the most effective tax preparation marketing channels. Launch targeted campaigns before the filing season to reach former Direct File users in ZIP codes where the program was available.

Mail postcards or letters featuring your “best offer savings, priority appointments, and other perks” for new clients. Include clear calls to action: “Book your appointment by December 15 and save $50” or “First 100 clients get free state return filing.”

Focus on ZIP codes with demographics matching Direct File users: younger populations, moderate incomes, high percentages of W-2 employees. Census data and mailing list providers can help you identify these areas.

Time your mailings carefully. Send the first wave in November to build awareness, a second wave in December to encourage early booking, and a final wave in January to capture last-minute filers. Multiple touches increase response rates.

Test different offers and creative approaches. Try A/B testing different headlines, pricing offers, or design styles to see what resonates. Track response rates using unique phone numbers or promotional codes for each mailing variant.

6. Partner with Financial Advisors and Employers

Partnerships multiply your reach without corresponding increases in marketing costs. Former Direct File users interact with other financial service providers and employers who can refer clients to your firm.

Partner with financial advisors, bookkeepers, payroll companies, and insurance agents who serve similar client demographics. Offer reciprocal referral arrangements: you send tax clients who need financial planning to them, they send planning clients who need tax prep to you. Verify compliance with any applicable referral fee regulations in your jurisdiction.

Approach employers, especially small-to-midsize businesses with many W-2 employees. Offer discounted group rates for their staff. Employers appreciate this low-cost benefit, and you gain access to dozens or hundreds of potential clients in the exact demographic profile of former Direct File users.

Create co-marketing materials that partners can share with their audiences. Provide flyers, email templates, social posts, or webinar content that introduces your services to their client bases. Make it easy for partners to refer by handling all the logistics.

7. Offer Free Consultations to Lower Barriers

Former Direct File users may feel uncertain about switching to paid services. Free consultations remove risk and allow potential clients to evaluate your firm before committing.

Promote 15-30 minute free consultations where prospects can ask questions, discuss their tax situations, and receive preliminary guidance. These conversations build trust and let you show your knowledge. Many prospects who start with free consultations convert to paying clients.

Structure consultations to be helpful but not complete. Answer general questions, explain your process, review pricing, and identify any obvious issues. Avoid providing full tax advice or detailed planning that substitutes for paid services. The goal is to build confidence in your knowledge, not give away your core service.

Make scheduling easy. Use online booking tools like Calendly or Acuity so prospects can book consultations without phone tag. Send confirmation emails and reminders to reduce no-shows.

Follow up after consultations. If prospects don’t book immediately, send personalized emails referencing their specific situations and explaining how your firm can help. Persistence pays off: many clients need multiple touches before committing.

When to Act: Timeline Matters

The 2026 filing season opens in late January. Tax firms must position themselves now to capture former Direct File users before competitors do or before users default to big-brand online services.

November 2025 (Now): Develop your Direct File alternative marketing plan. Create landing pages, write SEO content, design referral programs, and plan advertising campaigns. Research target ZIP codes and demographic data. Build partnerships with complementary service providers.

December 2025: Launch marketing campaigns. Start direct mail waves, activate Google Ads and social media advertising, publish blog content, and promote your services through email newsletters. Begin offering free consultations and early-bird discounts. Train staff on messaging for former Direct File users.

January 2026: Ramp up visibility as the filing season approaches. Maximize ad spend, send final direct mail pieces, and activate referral program promotion among existing clients. Verify adequate capacity to handle increased volume from new client acquisition.

February-April 2026: Deliver for new clients. Provide fast turnarounds, accurate returns, and excellent service to convert first-time clients into long-term relationships. Collect testimonials and reviews. Track which acquisition channels delivered the best ROI.

Post-Season Review: Analyze what worked. Which marketing channels produced the most clients at the lowest cost? Which client segments were most profitable? What operational challenges emerged from volume increases? Use these insights to refine your approach for 2027.

Tools to Support Client Acquisition

Tax firms need the right technology to efficiently serve an influx of former Direct File users who expect digital experiences.

Practice management software: Platforms like Canopy, TaxDome, or Karbon help manage client intake, document collection, workflow, and communication. These systems automate repetitive tasks and keep client information organized.

CRM systems: Track prospects, referrals, and marketing campaign performance with tools like HubSpot, Salesforce, or Keap. CRM systems verify no potential client falls through the cracks and help measure marketing ROI.

Online tax software: If you don’t already use professional cloud-based tax software, now is the time to adopt it. Platforms like Drake, Lacerte, ProSeries, or TaxSlayer Pro allow remote document collection, electronic signatures, and portal-based client communication.

Marketing automation: Tools like Mailchimp, ActiveCampaign, or Constant Contact automate email campaigns, nurture sequences, and client communications. Set up drip campaigns that guide prospects from awareness to booking.

Scheduling tools: Calendly, Acuity, or Square Appointments eliminate phone tag for booking consultations and appointments. Former Direct File users expect self-service booking like they experienced with the government tool.

Analytics platforms: Google Analytics, Google Search Console, and call tracking services help you measure marketing performance. Track which channels create traffic, where conversions happen, and what messaging resonates.

Why This Opening Won’t Last Forever

The window to capture former Direct File users is limited. Large online providers like TurboTax, H&R Block, and TaxAct will aggressively market to this population. Free File Alliance providers will position themselves as free alternatives. National chains have large advertising budgets and brand recognition.

Local and regional tax firms have strengths: personal service, local knowledge, relationship-based practices, and flexibility that large platforms can’t match. But you must act quickly to establish your firm as the go-to Direct File alternative before users make other choices.

User habits form fast. If a former Direct File user files with TurboTax in 2026 and has an acceptable experience, they will likely return to TurboTax in 2027. Once lost, these clients become much harder to recapture. The 2026 filing season represents a one-time disruption that creates switching options.

The market opening is real and sizable. Nearly 300,000 users need new solutions, and millions more qualified for Direct File but had not yet tried it. Price-conscious younger professionals with simple returns represent profitable long-term clients if acquired now.

Tax preparation firms that position themselves as affordable, digital-friendly Direct File alternatives will capture meaningful market share. Those who ignore this opening will watch competitors grow while their own new client acquisition stalls.

HelloPiko provides accounting automation tools that help tax professionals streamline client intake, document management, and workflow automation. Our platform is designed for modern accounting firms looking to scale efficiently while delivering exceptional client experiences.