Tax Preparation Software Developers in the US - Market Research Report (2014-2029)
New York, United States
Last Updated: January 2024
NAICS OD4549Revenue
$4.4bn
Past 5-Year Growth
Profit
$X.Xbn
Employees
7,705
Businesses
124
Wages
$X.Xbn
Tax Preparation Software Developers in the US industry analysis
If Benjamin Franklin had lived in the 21st century, his famous adage might have read a little differently: “In this world, nothing can be certain except death and taxes being way too complicated.” Tax software packages have evolved into an invaluable tool, transforming the often-dreaded tax season into a less daunting experience for many. Its appeal lies in its ability to simplify the complex tax filing process, automate calculations, and ensure compliance with ever-changing tax laws. These platforms have gained popularity with an increasingly tech-savvy population. However, in recent years, tax software makers have faced a series of challenges that have shifted the bedrock of private tax software itself, despite revenue continuing to rise at a CAGR of 4.5% to $4.4 billion in 2023, when revenue will expand 2.3%.Tax software enjoys a unique position in the broader software industry, as its revenue generation mechanisms differ. Unlike general software, which relies on one-time purchase or subscription models, tax software providers sell only one copy of their software each year. Companies often employ complex and potentially manipulative marketing strategies to encourage users to upgrade to make up for the nonrecurring income. These tactics may range obscure free versions to the aggressive advertising of premium tools. While these strategies undoubtedly boost revenue, they also stir consumer distrust, particularly in the era of social media transparency. Nevertheless, the pandemic-induced shift to digital services saw revenue growth, partly thanks to the extension of tax filing deadlines and the sudden need for more customer tax support.The IRS' public tax software looms large on the horizon, threatening to bulldoze the entire private tax prep sector by offering free filing for many or all citizens. With advancements in mobile tax software and the incorporation of AI language models, companies will inevitably push back by offering higher-quality filing capabilities. Despite these innovations favoring tech-savvy users, fundamental concerns remain about the digital divide and data privacy; tax filing fundamentally requires transferring the most sensitive information. Currently, tax software companies are expected to expand at a CAGR of just 1.0%, reaching $4.6 billion before 2028, while profit falls to 29.6%. Still, the future of private filing software is more uncertain than at any other time in the history of modern taxes.
Trends and Insights
- Tax software providers operate differently from general software companies, as they can only sell one copy of their software each year to non-business entities. This has led to unique marketing strategies to encourage users to upgrade despite these being very unpopular.
- Privacy-focused users favor local tax software due to its offline accessibility and reduced risk of data leaks. Online tax software and mobile apps offer more convenience and real-time updates, while mobile software can serve as either a supplemental tool or a primary tool for tax filing.
- Silicon Valley's tech hub status draws tax professionals and provides access to skilled tech workers, stimulating innovation and competitiveness in tax software development. The region's proximity to leading tech companies and potential investors gives developers strategic market advantages.
- Tax software companies engage in fierce internal competition, with major brands like TurboTax and H&R Block dominating the market due to their brand recognition and broad customer base. They compete in ease of use, reliability, and excellent customer service, often offering multiple tiers of software packages with varied features that cater to different customer needs.
Industry Overview
Market size and recent performance (2014-2029)
Industry revenue has grown at a CAGR of 4.5 % over the past five years, to reach an estimated $4.4bn in 2024.
Trends and Insights
Intuit faces legal troubles and increased competition following allegations of deceptive practices
- In 2020, Intuit, the developer of TurboTax, was sued by the IRS for allegedly steering eligible taxpayers away from its Free File program, causing them to pay for services they could have received for free.
- Additional trends and insights available with purchase
Source: IBISWorld
Industry outlook (2024-2029)
Market size is projected to grow over the next five years.
Trends and Insights
The IRS's own tax software could devastate the entire private tax prep sector
- The IRS is developing its own tax software, which already began testing in 2023, due to the public-private-partnership Free File Alliance only attracting 2% of filers.
Biggest companies in the Tax Preparation Software Developers in the US
| Company | Market Share (%)
2023 | Revenue ($m)
2023 | Profit ($m)
2023 | Profit Margin (%)
2023 |
|---|---|---|---|---|
Intuit Inc. | 3,270.8 | 1,225.2 | 37.5 | |
H&R Block, Inc. | 278.1 | 61.8 | 22.2 |
To view the market share and analysis for all 2 top companies in this industry, view purchase options.
Products & Services Segmentation
Source: IBISWorld
Industry revenue is measured across several distinct product and services lines, including Online tax software, Desktop tax software and Mobile tax software. Online tax software is the largest segment of the Tax Preparation Software Developers in the US.
Trends and Insights
Local tax software is mostly old copies only, used by privacy-conscious and security-focused individuals.
- Consumers and businesses can work on their tax-related tasks on their desktops or laptops.
- More insights available in the full report
Widen you competitive advantage with related industries
Competitors
- Financial Planning & Advice in the US
- Tax Preparation Services in the US
Complementors
- Law Firms in the US
- Business Analytics & Enterprise Software Publishing in the US
International industries
- Software Publishing in Canada
- Software Publishing in Australia
- Software Publishing in the UK
- App Development in the UK
- Financial Technology in the UK
Table of Contents
About this industry
Industry definition
This industry provides software, usually hosted online, that enables individuals to file federal and state tax returns. The software is designed to guide users through their tax returns step-by-step. Additionally, operators in the industry provide software for small businesses. This industry excludes tax preparation software used by professional accountants.
What's included in this industry?
Online Tax SoftwareDesktop Tax SoftwareIRS Free-File Tax SoftwareMobile Tax SoftwareCompanies
Intuit Inc.H&R Block, Inc.Purchase this report to view all 2 major companies in this industry.
Related Terms
FREE FILE ALLIANCEE-FILINGTAX DEDUCTIONINTERNAL REVENUE SERVICESOFTWARE AS A SERVICE (SAAS)Industry Code
NAICS 51121 - Tax Preparation Software Developers in the US
Performance
Get an indication of the industry's health through historical, current and forward-looking trends in the performance indicators that make or break businesses.
Analyst insights
Tax software providers operate differently from general software companies, as they can only sell one copy of their software each year to non-business entities. This has led ...
In this chapter (4)
- Current Performance
- Outlook
- Volatility
- Life Cycle
Key metrics
- Annual Revenue, Recent Growth, Forecast, Revenue Volatility
- Number of Employees, Recent Growth, Forecast, Employees per Business, Revenue per Employee
- Number of Businesses, Recent Growth, Forecast, Employees per Business, Revenue per Business
- Total Profit, Profit Margin, Profit per Business
Charts
- Revenue, including historical (2014-2023) and forecast (2024-2029)
- Employees, including historical (2014-2023) and forecast (2024-2029)
- Businesses, including historical (2014-2023) and forecast (2024-2029)
- Profit, including historical (2014-2024)
- Industry Volatility vs. Revenue Growth
- Industry Life Cycle
Detailed analysis
- Trends in supply, demand and current events that are driving current industry performance
- Expected trends, economic factors and ongoing events that drive the industry's outlook
- Key success factors for businesses to overcome volatility
- How contribution to GDP, industry saturation, innovation, consolidation, and technology and systems influence the industry's life cycle phase.
Products and Markets
Learn about an industry's products and services, markets and trends in international trade.
Analyst insight
Privacy-focused users favor local tax software due to its offline accessibility and reduced risk of data leaks. Online tax software and mobile apps offer more convenience and...
In this chapter
- Products & Services
- Major Markets
Key metrics
- Largest market segment and value in 2024
- Product innovation level
Charts
- Products & services segmentation in 2024
- Major market segmentation in 2024
Detailed analysis
- Trends impacting the recent performance of the industry's various segments
- Innovations in the industry's product or service offering, specialization or delivery method
- Key factors that successful businesses consider in their offerings
- Buying segments and key trends influencing demand for industry products and services
Geographic Breakdown
Discover where business activity is most concentrated in an industry and the factors driving these trends to find opportunities and conduct regional benchmarking.
Analyst insights
Silicon Valley's tech hub status draws tax professionals and provides access to skilled tech workers, stimulating innovation and competitiveness in tax software development. ...
In this chapter (1)
- Business Locations
Charts
- Share of revenue, establishment, wages and employment in each state
- Share of population compared to establishments in each region in 2024
Tables
- Number and share of establishments in each state in 2024
- Number and share of revenue each state accounts for in 2024
- Number and share of wages each state accounts for in 2024
- Number and share of employees in each state in 2024
Detailed analysis
- Geographic spread of the industry across North America, and trends associated with changes in the business landscape
- Key success factors for businesses to use location to their advantage
Competitive Forces
Get data and insights on what's driving competition in an industry and the challenges industry operators and new entrants may face, with analysis built around Porter's Five Forces framework.
Analyst insights
Tax software companies engage in fierce internal competition, with major brands like TurboTax and H&R Block dominating the market due to their brand recognition and broad cust...
In this chapter (4)
- Concentration
- Barriers to Entry
- Substitutes
- Buyer & Supplier Analysis
Key metrics
- Industry concentration level
- Industry competition level and trend
- Barriers to entry level and trend
- Substitutes level and trend
- Buyer power level and trend
- Supplier power level and trend
Charts
- Market share concentration among the top 4 suppliers from 2019-2024
- Supply chain including upstream supplying industries and downstream buying industries, flow chart
Detailed analysis
- Factors impacting the industry’s level of concentration, such as business distribution, new entrants, or merger and acquisition activity.
- Key success factors for businesses to manage the competitive environment of the industry.
- Challenges that potential industry entrants face such as legal, start-up costs, differentiation, labor/capital intensity and capital expenses.
- Key success factors for potential entrants to overcome barriers to entry.
- Competitive threats from potential substitutes for the industry’s own products and services.
- Key success factors for how successful businesses can compete with substitutes.
- Advantages that buyers have to keep favorable purchasing conditions.
- Advantages that suppliers have to maintain favorable selling conditions.
- Key success factors for how businesses can navigate buyer and supplier power.
Companies
Learn about the performance of the top companies in the industry.
Analyst insights
Intuit is the most recognizable name in the tax software community of companies. Their tax software is responsible for a vast majority of returns each year, even through repe...
In this chapter
- Market Share Concentration
- Companies
- Company Spotlights
Charts
- Industry market share by company in 2020 through 2024
- Major companies in the industry, including market share, revenue, profit and profit margin in 2024
- Overview of Intuit Inc.'s performance by revenue, market share and profit margin from 2018 through 2024
- Overview of H&R Block, Inc.'s performance by revenue, market share and profit margin from 2018 through 2024
Detailed analysis
- Description and key data for Intuit Inc., and factors influencing its performance in the industry
- Description and key data for H&R Block, Inc., and factors influencing its performance in the industry
External Environment
Understand the demographic, economic and regulatory factors that shape how businesses in an industry perform.
Analyst insights
The IRS Free-File Alliance allows tax software companies to offer free services, gaining exposure and allowing users to upgrade to paid services. This system has been critici...
In this chapter
- External Drivers
- Regulation & Policy
- Assistance
Key metrics
- Regulation & policy level and trend
- Assistance level and trend
Charts
- Regulation & Policy historical data and forecast (2014-2029)
- Assistance historical data and forecast (2014-2029)
Detailed analysis
- Demographic and macroeconomic factors influencing the industry, including Regulation & Policy and Assistance
- Major types of regulations, regulatory bodies, industry standards or specific regulations impacting requirements for industry operators
- Key governmental and non-governmental groups or policies that may provide some relief for industry operators.
Financial Benchmarks
View average costs for industry operators and compare financial data against an industry's financial benchmarks over time.
Analyst insights
The Tax Preparation Software Developers industry has high profits thanks to intellectual property laws and low production costs. The SaaS business model further boosts profit...
In this chapter
- Cost Structure
- Financial Ratios
- Key Ratios
Key metrics
- Profit margin, and how it compares to the sector-wide margin
- Average wages, and how it compares to the sector-wide average wage
- Largest cost component as a percentage of revenue
- Industry average ratios for days' receivables, industry coverage and debt-to-net-worth ratio
Charts
- Average industry operating costs as a share of revenue, including purchases, wages, depreciation, utilities, rent, other costs and profit in 2024
- Average sector operating costs as a share of revenue, including purchases, wages, depreciation, utilities, rent, other costs and profit in 2024
- Investment vs. share of economy
Data tables
- Industry Multiples (2017-2022)
- Industry Tax Structure (2017-2022)
- Income Statement (2017-2022)
- Balance Sheet (2017-2022)
- Liquidity Ratios (2017-2022)
- Coverage Ratios (2017-2022)
- Leverage Ratios (2017-2022)
- Operating Ratios (2017-2022)
- Cash Flow & Debt Service Ratios (2014-2029)
- Revenue per Employee (2014-2029)
- Revenue per Enterprise (2014-2029)
- Employees per Establishment (2014-2029)
- Employees per Enterprise (2014-2029)
- Average Wage (2014-2029)
- Wages/Revenue (2014-2029)
- Establishments per Enterprise (2014-2029)
- IVA/Revenue (2014-2029)
- Imports/Demand (2014-2029)
- Exports/Revenue (2014-2029)
Detailed analysis
- Trends in the cost component for industry operators and their impact on industry costs and profitability
Key Statistics
Industry Data
Data Tables
Including values and annual change:
- Revenue (2014-2029)
- IVA (2014-2029)
- Establishments (2014-2029)
- Enterprises (2014-2029)
- Employment (2014-2029)
- Exports (2014-2029)
- Imports (2014-2029)
- Wages (2014-2029)
Methodology
How are IBISWorld reports created?
IBISWorld has been a leading provider of trusted industry research for over 50 years to the most successful companies worldwide. With offices in Australia, the United States, the United Kingdom, Germany and China, we are proud to have local teams of analysts that conduct research, data analysis and forecasting to produce data-driven industry reports.
Our analysts start with official, verified and publicly available sources of data to build the most accurate picture of each industry. Analysts then leverage their expertise and knowledge of the local markets to synthesize trends into digestible content for IBISWorld readers. Finally, each report is reviewed by one of IBISWorld’s editors, who provide quality assurance to ensure accuracy and readability.
IBISWorld relies on human-verified data and human-written analysis to compile each standard industry report. We do not use generative AI tools to write insights, although members can choose to leverage AI-based tools within the platform to generate additional analysis formats.
What data sources do IBISWorld analysts use?
Each industry report incorporates data and research from government databases, industry-specific sources, industry contacts, and our own proprietary database of statistics and analysis to provide balanced, independent and accurate insights.
Key data sources in the US include:
- US Census Bureau
- US Bureau of Labor Statistics
- US International Trade Commission
Analysts also use industry specific sources to complement catch-all sources, although their perspective may focus on a particular organization or representative body, rather than a clear overview of all industry operations. However, when balanced against other perspectives, industry-specific sources provide insights into industry trends.
These sources include:
- Industry and trade associations
- Industry federations or regulators
- Major industry players annual or quarterly filings
Finally, IBISWorld’s global data scientists maintain a proprietary database of macroeconomic and demand drivers, which our analysts use to help inform industry data and trends. They also maintain a database of statistics and analysis on thousands of industries, which has been built over our more than 50-year history and offers comprehensive insights into long-term trends.
How does IBISWorld forecast its data?
IBISWorld’s analysts and data scientists use the sources above to create forecasts for our proprietary datasets and industry statistics. Depending on the dataset, they may use regression analysis, multivariate analysis, time-series analysis or exponential smoothing techniques to project future data for the industry or driver. Additionally, analysts will leverage their local knowledge of industry operating and regulatory conditions to impart their best judgment on the forecast model.
IBISWorld prides itself on being a trusted, independent source of data, with over 50 years of experience building and maintaining rich datasets and forecasting tools. We are proud to be the keystone source of industry information for thousands of companies across the world.
Learn more about our methodology and data sourcing on the Help Center.
Frequently Asked Questions
Unlock comprehensive answers and precise data upon purchase. View purchase options.
What is the market size of the Tax Preparation Software Developers in the US industry in United States in 2024?
The market size of the Tax Preparation Software Developers in the US industry in United States is $4.4bn in 2024.
How many businesses are there in the Tax Preparation Software Developers in the US industry in 2024?
There are 124 businesses in the Tax Preparation Software Developers in the US industry in United States, which has grown at a CAGR of 3.6 % between 2019 and 2024.
Has the Tax Preparation Software Developers in the US industry in United States grown or declined over the past 5 years?
The market size of the Tax Preparation Software Developers in the US industry in United States has been growing at a CAGR of 4.5 % between 2019 and 2024.
What is the forecast growth of the Tax Preparation Software Developers in the US industry in United States over the next 5 years?
Over the next five years, the Tax Preparation Software Developers in the US industry in United States is expected to grow.
What are the biggest companies in the Tax Preparation Software Developers in the US market in United States?
The biggest companies operating in the Tax Preparation Software Developers market in United States are Intuit Inc. and H&R Block, Inc.
What does the Tax Preparation Software Developers in the US in United States include?
Online Tax Software and Desktop Tax Software are part of the Tax Preparation Software Developers in the US industry.
Which companies have the highest market share in the Tax Preparation Software Developers in the US in United States?
The company holding the most market share in United States is Intuit Inc..
How competitive is the Tax Preparation Software Developers in the US industry in United States?
The level of competition is moderate and increasing in the Tax Preparation Software Developers in the US industry in United States.
