Tax Preparation Services

The 19,460 tax preparation services in the US provide federal and state tax return preparation, filing, and related services to individuals and corporations. Other services provided include bookkeeping and compilations services and tax planning and consulting services. To mitigate the highly seasonal nature of tax return work, some firms also offer accounting, payroll, or insurance services.

Competition From Alternative Sources

Tax preparation service providers face competition from a variety of sources, including do-it-yourself (DIY) programs, accounting firms, law firms, independent CPAs, and government programs.

Seasonality

Demand for tax preparation services is highly seasonal because the majority of clients file returns between January and April.

Sep 17, 2026 - IRS Delays Stall Billions in High-Income Tax Revenue

• The IRS let tens of thousands of high-income nonfiler cases sit idle, potentially delaying hundreds of millions of dollars in tax collections, according to the Treasury Inspector General for Tax Administration (TIGTA). The agency found that 38,824 high-priority cases involving 33,653 taxpayers were stuck at the first-notice stage as of June 2025, representing about $15.7 billion in potential assessments. TIGTA estimates that earlier action could have produced returns or assessments in more than 10,000 cases and generated about $321 million in additional revenue. The cases were part of a 2024 IRS initiative targeting nonfilers with income of $400,000 or more and other priority taxpayers. Resource concerns and technical problems initially prompted the IRS to delay final notices. After TIGTA flagged the issue, the IRS moved the stalled cases forward in March 2026.
• Growing concerns about data privacy and identity theft are forcing tax preparation firms to make cybersecurity a core part of their business. Tax preparers hold some of consumers' most sensitive financial information, making them frequent targets for cybercriminals seeking to steal taxpayer identities or file fraudulent returns. The IRS continues to urge firms to strengthen security with multifactor authentication, employee training, and written information security plans, while reminding preparers of their obligations under the Federal Trade Commission's (FTC) Safeguards Rule. At the same time, the FTC has warned tax preparation companies against using taxpayer data for advertising or other purposes without proper consent, increasing scrutiny of data privacy practices. As a result, firms are investing more in secure client portals, encrypted document sharing, and other cybersecurity measures, turning strong data protection into both a compliance requirement and a competitive advantage for attracting and retaining clients.
• Tax refunds in 2026 are higher overall but failing to meet expectations at a national level, according to Internal Revenue Service data. The average refund is about $3,462 - roughly an 11% increase from $3,116 last year - while total refunds have climbed significantly, with more than $241 billion issued, up about 14% year over year. The increases are largely driven by new tax law changes, including expanded deductions for tips, overtime, and seniors, as well as higher credits. However, early projections suggest refunds could rise by as much as $1,000 per filer, but actual gains have been closer to $300-$350 on average. The impact has been uneven across households, depending on income, withholding, and eligibility for deductions, which results in smaller-than-expected returns for many taxpayers. While refunds are objectively larger, their perceived financial impact is muted, especially amid broader economic doldrums.
• The Internal Revenue Service (IRS) has shifted away from paper refund checks, making electronic transactions the default and creating new compliance and client-service considerations for tax preparers. Accurate bank or prepaid account information is now critical at filing; missing or rejected details can trigger IRS notices, refund holds, and follow-up deadlines that increase administrative burdens. From a risk-management standpoint, the move reduces fraud exposure and improves processing efficiency, but it also raises the stakes for data accuracy and client education. Tax preparers will need to proactively confirm direct deposit details, explain acceptable nonbank options, and manage client expectations around timing when exceptions occur. Overall, the change reinforces the growing importance of payment mechanics in tax administration - turning refund delivery into another area where procedural precision and upfront verification are critical.

Industry size & Structure

The average tax preparation services provider works out of a single location employs about 6 workers and generates about $421,300 annually.

• The tax preparation services industry consists of about 19,460 firms that employ about 131,600 workers and generates about $8.2 billion annually.
• The industry is concentrated at the top and fragmented at the bottom; the top 8 companies account for almost 40% of industry revenue. The top 50 companies account for less than 45% of industry revenue.
• Large companies include H&R Block, Jackson Hewitt Tax Service, and Liberty Tax Services (BP Commercial Funding Trust).
• The industry includes national chains, franchises, and independent operators.
• About 53% of taxpayers use third parties to prepare taxes and tax preparation software is used in nearly all returns, according to the IRS.