The IRS’ free tax filing program is in jeopardy as the agency faces continued cuts from the Trump administration.

After a limited pilot launch in 2024, the program, known as Direct File, expanded to more than 30 million taxpayers across 25 states for the 2025 filing season.   

Funded under the Inflation Reduction Act in 2022, the program has been heavily scrutinized by Republicans, who have criticized the cost and participation rate. Over the past year, Republican lawmakers from both chambers have introduced legislation to halt the IRS’ free filing program.

Now, some reports say Direct File could be at risk. Meanwhile, no decision has been made yet about the program’s future, according to a White House administration official. 

More from Personal Finance:
Federal Reserve: College is still worth it for most students
Here’s why retirees shouldn’t fully ditch stocks
Here’s how a trade war could impact the price of clothing

During his Senate confirmation hearing in January, Treasury Secretary Scott Bessent committed to keeping Direct File active during the 2025 filing season without commenting on future years.  

“I will consult and study the program and understand it better and make sure it works to serve the IRS’ three goals of collections, customer service and privacy,” Bessent told the Senate Finance Committee at the hearing. 

However, the future of the free tax filing program remains unclear.

As of April 17, the Direct File website said the program would be open until Oct. 15, which is the deadline for taxpayers who filed for a federal tax extension.

Many taxpayers can also file for free via another program known as IRS Free File, which is a public-private partnership between the IRS and the Free File Alliance, a nonprofit coalition of tax software companies.

The IRS in May 2024 extended the Free File program through 2029.

“No one should have to pay huge fees just to file their taxes,” Senate Finance Committee Ranking Member Ron Wyden, D-Ore., said in a statement on Wednesday.

Wyden described the program as “a massive success, saving taxpayers millions in fees, saving them time and cutting out an unnecessary middleman.”

In January, more than 130 Democrats, led by Sens. Elizabeth Warren, D-Mass., and Chris Coons, D-Del., voiced support for Direct File.

However, opponents have criticized the program’s participation rate and cost.

During the 2024 pilot, some 423,450 taxpayers created or signed in to a Direct File account. Roughly one-third of those taxpayers, about 141,000 filers, submitted a return through Direct File, according to a March report from the Treasury Inspector General for Tax Administration.

Those figures represent a mid-season 2024 launch in 12 states for only simple returns. It’s unclear how many taxpayers used Direct File through the April 15 deadline.

The cost for Direct File through the pilot was $24.6 million, the IRS reported in May 2024. Direct File operational costs were an extra $2.4 million, according to the agency.

Some investors accustomed to the dominance of U.S. stocks versus the rest of the world are making a stunning pivot toward international equities, fearing U.S. assets may have taken on more risk amid escalating trade tensions initiated by President Donald Trump.

The S&P 500 sank more than 6% since Trump first announced his tariff plan, while the Dow and Nasdaq have each tumbled more than 7%.

There was a strong argument to dial back U.S. stock holdings and adopt a more global portfolio even before the recent volatility, said Christine Benz, director of personal finance and retirement planning for Morningstar.

“But I think the case for international diversification is even greater 1744909145, given recent developments,” she said.

Jacob Manoukian, head of U.S. investment strategy at J.P. Morgan Private Bank, offered a similar assessment. “Global diversification seems like a prudent strategy,” he wrote in a research note on Monday.

The S&P 500 index had an average annual return of 11.9% from mid-2008 through 2024, beating returns of developed countries by a “sizable margin,” according to analysts at J.P. Morgan Private Bank.

The MSCI EAFE index — which tracks stock returns in developed markets outside of the U.S. and Canada — was up 3.6% per year over the same period, on average, they wrote.

However, the story is different this year, experts say.

“In a surprising twist, the U.S. equity market has just offered investors a timely reminder about why diversification matters,” the analysts at J.P. Morgan Private Bank wrote. “Although U.S. outperformance has been a familiar feature of global equity markets since mid-2008, change is possible.”

More from Personal Finance:
Why retirees shouldn’t fully ditch stocks
Cash may feel safe when stocks slide, but it has risks
How a trade war could impact the price of clothing

The Trump administration’s tariff policy and an escalating trade war with China have raised concerns about the growth of the U.S. economy.

U.S. markets have been under pressure ever since the White House first announced country-specific tariffs on April 2. Trump imposed tariffs on many nations, including a 145% levy on imports from China.

As of Thursday morning, the S&P 500 was down roughly 10% year-to-date, while the Nasdaq Composite has pulled back more than 16% in 2025. The Dow Jones Industrial Average had lost nearly 8%. Alternatively, the EAFE was up about 7%.

At the same time, rising global trade tensions have taken a toll on the bond market, threatening to shake the confidence of holders of U.S. debt. The U.S. dollar has also weakened, nearing a one-year low as of Thursday morning.

It’s unusual for U.S. stocks, bonds and the dollar to fall at the same time, analysts said.

Former Treasury Secretary Janet Yellen said Monday that President Donald Trump’s tariffs have made it more difficult for Americans to find comfort in the U.S. financial system.

“This is really creating an environment in which households and businesses feel paralyzed by the uncertainty about what’s going to happen,” Yellen told CNBC during a “Squawk Box” interview. “It makes planning almost impossible.”

Since 1975, U.S. stock returns have outperformed those of international stocks for stretches of about eight years, on average, according to an analysis by Hartford Funds through 2024. Then, U.S. stocks cede the mantle to international stocks, it said.

Based on history, non-U.S. equities are overdue to reclaim the top spot: The U.S. is currently 13.8 years into the current cycle of stock outperformance, according to the Hartford Funds analysis.

U.S. markets had already showed weakness heading into the year amid concerns about the health of the economy grew and as “air came out the valuations of ‘big-tech’ stocks,” according to Capital Economics analysts.

“In that respect, ‘Liberation Day’ — which accentuated these moves — only added fuel to a fire that had already been burning,” they wrote.

A good starting point for investors would be to mirror a global stock fund like the Vanguard Total World Stock Index Fund ETF (VT), said Benz of Morningstar. That fund holds about 63% of assets in U.S. stocks and 37% in non-U.S. stocks.

It may make sense to pare back exposure to international stocks as individual investors approach retirement, she said, to reduce the volatility that comes from fluctuations in foreign exchange rates.

“Part of our core models for clients have always had international exposure, it’s traditionally part of any risk-adjusted portfolio,” said certified financial planner Douglas Boneparth, president of Bone Fide Wealth in New York, of the conversations he is having with his clients.

Even though those asset classes didn’t perform as well over the last few years, “they’ve done a pretty good job here of helping reduce the brunt of this tariff volatility,” said Boneparth, a member of the CNBC Financial Advisor Council.

Still, Boneparth cautions investors against making any sudden moves to add non-U.S. equities to their portfolios.

“If you are thinking about making changes now, be careful,” he said. “Do you lock in losses to U.S. stocks to gain international exposure? You want to tread carefully here,” he said. “Are you chasing or timing? You usually don’t want to do those things.”

However, this may be a good time to check your investments to make sure you are still allocated properly and rebalance as needed, he added. “By rebalancing, you can rotate out of less risky assets into equities, strategically buying the dip.”

There have been very few times in history when clients asked about increasing their investments overseas, “which is happening now,” said CFP Barry Glassman, the founder and president of Glassman Wealth Services.

“Given that both stocks and currency are outperforming U.S. indices it’s no wonder there is greater interest in foreign stocks today,” said Glassman, who is also a member of the CNBC Advisor Council.

“Even in the past, when U.S. stocks have fallen, the dollar’s gains helped to offset a portion of the losses. In the past two weeks, that has not been the case,” he said.

Glassman said he maintains a two-thirds to one-third ratio of U.S. stocks to foreign stock funds in the portfolios he manages.

“We are not making any moves now,” he said. “The moves for us were made over time to maintain what we consider the appropriate foreign allocation.”

Retirees may think moving all their investments to cash and bonds — and out of stocks — protects their nest egg from risk.

They would be wrong, experts say.

Most, if not all, retirees need stocks — the growth engine of an investment portfolio — to ensure they don’t run out of money during a retirement that might last decades, experts said.

“It’s important for retirees to have some equities in their portfolio to increase the long-term returns,” said David Blanchett, head of retirement research for PGIM, an investment management arm of Prudential Financial.

The average life span has increased from about 68 years in 1950 to to 78.4 in 2023, according to the Centers for Disease Control and Prevention. What’s more, the number of 100-year-olds in the U.S. is expected to quadruple over the next three decades, according to Pew Research Center.

Retirees may feel that shifting out of stocks — especially during bouts of volatility like the recent tariff-induced selloff — insulates their portfolio from risk.

They would be correct in one sense: cash and bonds are generally less volatile than stocks and therefore buffer retirees from short-term gyrations in the stock market.

Indeed, finance experts recommend dialing back stock exposure over time and boosting allocations to bonds and cash. The thinking is that investors don’t want to subject a huge chunk of their portfolio to steep losses if they need to access those funds in the short term.

Dialing back too much from stocks, however, poses a risk, too, experts said.

More from Personal Finance:
Cash may feel safe when stocks slide, but has risks
How a trade war could impact the price of clothing
Is now a good time to buy gold?

Retirees who pare their stock exposure back too much may have a harder time keeping up with inflation and they raise the risk of outliving their savings, Blanchett said.

Stocks have had a historical return of about 10% per year, outperforming bonds by about five percentage points, Blanchett said. Of course, this means that over the long term, investing in stocks has yielded higher returns compared to investing in bonds. 

“Retirement can last up to three decades or more, meaning your portfolio will still need to grow in order to support you,” wrote Judith Ward and Roger Young, certified financial planners at T. Rowe Price, an asset manager.

• Bucketing. Retirees can do lasting damage to the longevity of their portfolio if they pull money from stocks that are declining in value, experts said. This risk is especially high in the first few years of retirement. It’s important for retirees to have separate buckets of bonds and cash they can pull from to get them through that time period as stocks recover.