Only 2% of 70% Eligible Taxpayers Use Free File as Cost Averages $270
NerdWallet’s February report finds 70% of US taxpayers qualify for IRS Free File but only 2% used it in 2024, with average taxpayer spending $270 on tax preparation. Lack of uptake tied to lobbying by TurboTax and H&R Block signals market opportunity for finance platforms to attract cost-conscious filers.
1. NerdWallet Report Highlights Underuse
NerdWallet’s February report finds that 70% of US taxpayers qualify for IRS Free File but only 2% filed returns through the program in 2024, indicating significant underutilization of the no-cost service.
2. Tax Prep Spending Trends
Data reveals the typical taxpayer spends $270 on commercial software or preparers, underlining the potential dollars being diverted away from government programs toward paid services.
3. Corporate Lobbying Effects
Lobbying efforts by TurboTax and H&R Block reportedly hindered Free File visibility, steering eligible filers toward paid alternatives and contributing to the program’s low adoption.
4. Implications for NerdWallet
With millions of cost-conscious filers underserved by Free File, NerdWallet and other digital finance platforms could capture market share by promoting free or low-cost tax solutions.