A stair-step, expandable file folder is disclosed, in which each pocket in the folder has the same depth, rather than the back pockets being deeper than the front pockets. The folder includes a series of dividers that form the front and back sides of the pockets of the folder. The top edges of the dividers have increasing height, from the front to the back of the folder. The dividers are folded to form the bottoms of the pockets, with the folded portions also increasing in height from the front to the back of the folder. Each divider extends downward to form the back face of a pocket, is folded forward to form the bottom face of the pocket, and is folded downward to extend toward the bottom edge of the folder. The troughs in an expandable gusset support the sides of the dividers. Above the fold portion, the divider laterally extends into one trough. Below the fold portion, the divider laterally extends into the adjacent trough toward the front of the folder.