Free File Open For Tax Returns

Published January 16, 2026

The Internal Revenue Service (IRS) announced that the IRS Free File program is now open. Tax returns filed with the IRS Free File Program will be received and held until the filing season is open later in January.

The Free File software system allows taxpayers to complete their tax returns at no cost. There are eight private-sector companies that allow complimentary use of their tax software. The program is available to taxpayers with an adjusted gross income (AGI) of $89,000 or less in 2025.

If a taxpayer has income over $89,000, he or she can use the Free File Fillable Forms. The fillable forms are excellent for individuals who have larger incomes and are comfortable preparing their own taxes using the IRS instructions and publications.

Each of the eight Free File partners set the requirements for using their complimentary software. The requirements will vary, but may include age, income, state of residence and military status. Both taxpayers and military personnel with 2025 AGI of $89,000 or less will be offered a free federal return. Some of the eight companies also offer a free state tax return.

Free File enables taxpayers to reduce their tax by claiming various benefits and credits. These may include the Earned Income Tax Credit (EITC), the Child Tax Credit (CTC) or other refundable credits.

The Free File software is available on IRS.gov/freefile. Taxpayers should visit the IRS website and click on "Explore Free Guided Tax Software." For a tool to help you select a provider, select "Find a Trusted Partner." You can select "Browse All Trusted Partners" and find an overview of all eight providers. The links will take you to the Free File companies’ website and allow you to complete your tax return.

The Free File companies for 2026 include 1040Now, Drake (1040.com), ezTaxReturn.com (both English and Spanish), FileYourTaxes.com, Online Taxes, TaxAct, TaxHawk (FreeTaxUSA) and TaxSlayer.

IRS CEO Pledges Good Service

Internal Revenue Service (IRS) CEO Frank Bisignano has promised high levels of service for this tax filing season. The IRS filing season will start on January 26, 2026. Bisignano stated, "We are driving a digital agenda while implementing one of the most robust tax bills ever, and going to do it with the objective to have a higher level of service."

Bisignano was appointed to the newly created CEO position of the IRS in October of 2025. He noted the One Big Beautiful Bill Act (OBBBA) includes deductions for overtime and tips. Bisignano acknowledges that there have been many staff reductions and that the 43-day government shutdown will likely impact the IRS.

Bisignano states, "We will be staffed; we are ready....We have an objective to have higher collections — I think that is something you will find us maniacally focused on."

Treasury Secretary Scott Bessent notes that there will be large tax refunds with the new deductions under OBBBA. Bessent states many individuals will receive "the largest tax refunds of their lives."

Tax commentators have observed that the IRS is functioning with a billion-dollar reduction in its budget. On January 11, the House Financial Services and General Government Committee passed an IRS budget for 2026 which reduces funding from $12.3 billion in 2025 to $11.2 billion. This is a compromise between the original proposal by the House Committee on Appropriations to reduce the budget by 23%, while the Senate proposed a 4% reduction.

With these reductions, commentators suggest that the IRS will have challenges in meeting the service goals set by CEO Bisignano. Sarah C. G. Christopherson is the former legislative and policy director for Americans for Tax Fairness. She noted, "Yes, it could have been worse, but given how deeply the IRS has been cut already, no one who wants a functional agency should be patting themselves on the back right now."

Senate Appropriations Committee ranking member Patty Murray (D-WA) indicated the compromise was the best option available. Sen. Murray stated, "These were tough negotiations under extremely challenging circumstances, and while I strongly disagree with some of the difficult spending decisions that were ultimately made, there is no doubt in my mind that this bipartisan compromise is a significantly better outcome than another yearlong continuing resolution that provides President Trump with slush funds and more power — and that fails to address urgent problems."

Former IRS Commissioner John Koskinen also commented on the IRS budget reductions. Commissioner Koskinen stated, "There has never been any argument with the fact that for every dollar you invest in enforcement you get back anywhere from four to 10 times the amount."

The 2026 budget proposal reduces the enforcement budget by $439 million and the operations budget by $941 million.

Joe Hughes of the Institute on Taxation and Economic Policy notes, "It also means that remaining IRS enforcement capabilities will likely pivot away from large corporations and the highest-income earners toward lower-income taxpayers, where audits take less time but generate lower returns for the IRS."

Group Exemption Letters Reauthorized by the IRS

In Rev. Proc. 2026-8; 2026-4 IRB 1, the Internal Revenue Service (IRS) noted that as of January 20, 2026, it will accept group exemption letter applications. The group exemption letter process had been paused under Notice 2020-36, 2020-21 IRB 840.

The IRS reports multiple reasons for the new reauthorization procedure. The IRS stated, "After considering the comments received in response to Notice 2020-36, the Treasury Department and the IRS issue this revenue procedure to reduce the administrative burden and increase the efficiency of the group exemption letter program, improve the integrity of data collected for purposes of oversight of the group exemption letter program, increase the transparency of the group exemption letter program, and increase compliance by central organizations and subordinate organizations with requirements of the group exemption letter program."

There are specific requirements for a group exemption letter. The central organization must have at least five subordinate organizations and may only maintain one group exemption letter. The subordinate organizations must be subject to general supervision or control. The affiliation may be demonstrated by a facts and circumstances test.

The central organization must obtain and review information on the subordinate organization's finances, activities and compliance. It must also transmit written information to each subordinate organization regarding the requirements to maintain tax-exempt status.

Control is defined by multiple tests with several options. Many central organizations will appoint the directors or trustees of the subordinate organization. There could be an appointment of a majority of the subordinate organization’s officers. The central organization and subordinate organization may enter into a written agreement that outlines in detail the control by the central organization. There are special accommodations related to the general supervision standard for religious organizations.

The central organization must submit a supplemental group ruling information (SGRI) each year to the IRS. The SGRI must specify "information regarding all changes in the purposes, character, or method of operation of all subordinate organizations included in the group exemption letter."

An exception is available for a central organization that is a church or an association of churches. A church organization is exempt from the SGRI reporting requirement.

Generally, the central and subordinate organizations must have a "uniform purpose statement" in their applicable governing instruments.

Applicable Federal Rate of 4.6% for February: Rev. Rul. 2026-3; 2026-6 IRB 1 (15 January 2026)

The IRS has announced the Applicable Federal Rate (AFR) for February of 2026. The AFR under Sec. 7520 for the month of February is 4.6%. The rates for January of 4.6% or December of 4.6% also may be used. The highest AFR is beneficial for charitable deductions of remainder interests. The lowest AFR is best for lead trusts and life estate reserved agreements. With a gift annuity, if the annuitant desires greater tax-free payments the lowest AFR is preferable. During 2026, pooled income funds in existence less than three tax years must use a 4.0% deemed rate of return. Charitable gift receipts should state, “No goods or services were provided in exchange for this gift and the nonprofit has exclusive legal control over the gift property.”