Tax Preparation Services Market

Tax Preparation Services Market Outlook (2023 to 2033)

The global tax preparation services market is expected to be worth US$ 28.2 billion in fiscal year 2023, up from US$ 27.0 billion in fiscal year 2022. From 2022 to 2032, the market is expected to grow at a 4.7% CAGR, reaching a value of US$ 44.7 billion by the end of 2033.

As per Fact.MR, a market research and competitive intelligence provider, the Tax Preparation Services have been driven, owing to the factors such as the increasing complexity of tax laws and regulations, rising awareness regarding tax planning and compliance, expansion of e-filing services, growing number of SMEs, and increasing use of cloud-based technologies.

Additionally, the growing demand for value-added services such as tax planning, compliance, and risk management is providing opportunities for tax preparation service providers to expand their offerings. Moreover, the increase in adoption of digital platforms is providing opportunities for tax preparation service providers to offer online and mobile solutions for tax preparation and planning, making it easier for individuals and businesses to access these services.

Furthermore, an increase in cross-border transactions is creating a demand for tax preparation services as individuals and businesses seek help in navigating the complex tax laws and regulations involved in international transactions. In addition, the rising need for tax optimization is providing opportunities for tax preparation service providers to offer services such as tax planning and strategy, tax compliance, as well as tax risk management.

Report Attributes	Details
Anticipated Base Year Value in 2022	US$ 27.0 Billion
Expected Market Value (2023)	US$ 28.2 Billion
Projected Forecast Value (2033)	US$ 44.7 Billion
Global Growth Rate (2023 to 2033)	4.7%
Expected Share of the North America Market (2023 to 2033)	35%
Anticipated Share of European Market (2023 to 2033)	22%
Prominent Players in The Global Market	415 Group; A Dowl Knight CPA; BDO USA, LLP; CapActix Business Solutions; Deloitte; Entigrity Solutions LLC; Ernst & Young; Franchise Group, Inc.; H&R Block; Invensis Inc.; Jackson Hewitt Tax Services; KPMG; PwC; RSM US; Ryan LLC; TurboTax Live

2018 to 2022 Tax Preparation Services Market Demand Analysis vs. Forecast 2023 to 2033

According to market research and competitive intelligence provider Fact.MR- the market for Tax Preparation Services reflected a value CAGR of 3.1% during the historical period, 2018-2022.

The tax preparation service providers have been increasingly leveraging technology to streamline the tax preparation process and offer value-added services such as real-time tax advice and planning. Also, these providers are also focusing on enhancing the customer experience by offering personalized services and user-friendly digital platforms.

Nowadays, tax preparation services have been expanding into developing economies, in order to tap into the growing demand for tax preparation services in these markets. Moreover, tax preparation service providers are forming partnerships and collaborations with technology companies, accounting firms, and financial institutions to expand their offerings and reach new customers.

The tax preparation services industry is facing increased regulatory scrutiny, with governments around the world imposing new regulations and oversight to ensure compliance with tax laws and regulations. All these factors are anticipated to propel the demand for tax preparation services in the near future.

Prominent Growth Drivers Influencing Tax Preparation Services Market

Increasing Small and Medium-Sized Enterprises to Fuel the Market Prospects

Small and medium-sized enterprises (SMEs) often face complex tax regulations as well as limited in-house resources, in order to navigate them, which in turn is accelerating the demand for tax preparation services to help them comply with tax laws and regulations.

The SMEs often have limited internal resources and may not have dedicated tax experts on their staff, which is also driving the revenue share of the tax preparation services, which help them with tax preparation and planning.

Hiring a tax preparation service provider is often more cost-effective for SMEs than hiring a full-time tax expert or dedicating internal resources to tax preparation and planning. Thus, this factor is also expected to fuel the market growth during the forecast period.

Additionally, as SMEs grow and expand, their tax needs become more complex, which in turn is likely to escalate the growth of the tax preparation services to help them navigate the complex tax landscape.

Increased Adoption of Tax Advisory Services to Foster the Market Growth

Businesses have been increasingly seeking the help of tax advisory services to minimize their tax liabilities and reduce additional taxational costs. Tax advisors provide expert guidance on tax planning and compliance, helping clients to minimize their tax exposure and avoid penalties. This factor is expected to bolster the growth of the tax preparation services market over the analysis period.

Additionally, tax advisory services also help businesses, as well as individuals, optimize their operations by providing guidance on tax-efficient strategies for managing their financial affairs. For instance, tax advisors can help clients structure their operations in a way that minimizes their tax liabilities while still meeting their business and financial objectives.

What Could Possibly Hinder Tax Preparation Services Market Demand?

DIY Tax Preparation Options to Hinder the Market Growth

The availability of online tax preparation software and mobile apps has made it easier for individuals and businesses to file their taxes on their own. This has reduced the demand for professional tax preparation services. Moreover, economic uncertainty, such as recessions and financial crises, can negatively impact the demand for tax preparation services as individuals and businesses may reduce their spending on non-essential services.

Additionally, the market for tax preparation services is becoming increasingly competitive, with a growing number of low-cost providers offering similar services. This factor is expected to impede the market growth during the analysis period.

Further, despite being a factor driving the growth of the tax preparation services market, the complexity of tax laws and regulations can also be a hindrance as individuals and businesses may choose to forgo professional tax preparation services, due to the high cost or difficulty in understanding the requirements. All the aforementioned factors are anticipated to restrain the market growth in the near future.

Category-wise Insights

Which Services Segment is forecast to gain the dominant market share?

Standard Tax Preparation Services to gain significant traction

According to Fact.MR’s data, standard tax preparation services are expected to enjoy the dominant position, with a market share of 69% over the forecast period. The standard tax preparation services segment is growing as individuals and businesses seek help in complying with tax laws and regulations. This segment provides basic tax preparation services, such as preparation and filing of tax returns, which is a critical need for many businesses and individuals.

The expansion of e-filing services has made it easier for individuals and businesses to file their taxes electronically, and the standard tax preparation services segment is benefiting from this trend as more people opt for online tax preparation services. Moreover, the growing number of small and medium-sized enterprises (SMEs) is creating a demand for standard tax preparation services as these businesses seek help in complying with tax laws and regulations.

Additionally, the standard tax preparation services segment is popular due to its affordability, as it offers basic tax preparation services at a lower cost compared to other tax preparation services segments. Furthermore, the standard tax preparation services segment is also popular due to its convenience and accessibility, as many individuals and businesses can access these services from the comfort of their own homes or offices. Hence, all the aforementioned factors are expected to increase the segmental growth during 2023-2033.

Which Category of Customers are likely to extensively deploy Tax Preparation Services?

Tax Preparation Services for Individual Customers will garner Popularity

According to Fact.MR’s data, preference for individual segment is expected to expand with a market share of 78% over the forecast period. There is a growing awareness of the importance of tax planning and compliance among individuals, leading to increased demand for tax preparation services. This is particularly true for individuals with complex tax situations, such as those with multiple sources of income or those who own investment properties.

Additionally, the expansion of e-filing services has made it easier for individuals to file their taxes electronically, and the individual segment is benefiting from this trend as more people opt for online tax preparation services. Further, the growing middle class in developing economies is creating a demand for tax preparation services as these individuals seek help in complying with tax laws and regulations and maximizing their income.

In addition, the individual segment is also growing due to its affordability, as many tax preparation services providers offer basic tax preparation services at a lower cost compared to other tax preparation services segments. Thus, all these factors will fuel the market growth in the near future.

Region-wise Analysis

What is the Outlook of the North American Tax Preparation Services market?

Increased Adoption of Digital Platforms to expand regional growth prospects

According to Fact.MR, North America is the fastest-growing Tax Preparation Services market region, accounting for over 35% of the market share in 2023, and is expected to maintain its dominance during the analysis period. Strong economic growth in the region is expected to drive demand for tax preparation services as individuals and businesses seek help in navigating the complex tax laws and regulations.

Moreover, the increasing adoption of digital platforms is expected to provide opportunities for tax preparation service providers to offer online and mobile solutions for tax preparation and planning, making it easier for individuals and businesses to access these services.

Additionally, the growing middle class in the region is expected to create a demand for tax preparation services as these individuals seek help in complying with tax laws and regulations and maximizing their income. All these factors are anticipated to accelerate the regional market growth during the forecast period.

What can be expected from the European Market for Tax Preparation Services?

Increasing Cross-Border Transactions will accelerate the regional demand

According to Fact.MR, the Tax Preparation Services market in Europe is expected to account for 22% of the market share in 2023, and is expected to accelerate during the analysis period. The increasing cross-border transactions in the region is expected to drive demand for tax preparation services as individuals and businesses seek help in navigating the complex tax laws and regulations involved in international transactions.

Moreover, the focus on digital transformation in the region is expected to provide opportunities for tax preparation service providers to offer online and mobile solutions for tax preparation and planning, making it easier for individuals and businesses to access these services. All these factors are anticipated to accelerate the regional market growth during the forecast period.

Start-up Scenario

• Founded in 2016, Starter’s CFO is a virtual Chief Financial Officer for startups offering complete financial and taxation services such as tax consultancy, management consultancy, accounting services, manpower management, secretarial services financial accounting consultants, payroll management and other financial services.
• Started in 2015, PocketLawyer is an online legal service marketplace. The company simplifies the cumbersome process of finding the right legal professional for businesses and individuals looking for affordable legal, tax and compliance related services. Presently, the company’s platform allows users to reach out to more than 1,200 plus verified professionals in more than 100 cities across India via phone and face-to-face meetings.

Competitive Landscape

Prominent players in the tax preparation services industry are taking advantage of the rapidly increasing demand for the chatbots in various applications. To further their outreach, players are relying on collaborations, partnerships and acquisitions with existing small, medium and large-scale providers.

Some prominent market developments are as follows:

• In January 2023, Boston Tax Help Coalition (BTHC) announced to offer free tax preparation services to Boston residents earning $60,000 or less a year. Moreover, the BTHC and its community partners are providing tax services remotely and in-person at over 30 neighborhood tax sites.
• In April 2022, the Dora City Council allowed a free IRS income tax preparation service to serve all of Walker County out of space in the Dora Civic Center.

Key Segments Covered in the Tax Preparation Services Market Report

• By Services:

  • Standard Tax Preparation Services
  • Tax-Related Other Financial Products

• By Customer Type:

  • Individual
  • Enterprises
  • Government Agencies

• By Region:

  • North America
  • Latin America
  • Europe
  • East Asia
  • South Asia and Oceania
  • Middle East & Africa