How Much Does It Cost To File Taxes?

Last Updated on February 26, 2025
Written by CPA Alec Pow | Content Reviewed by CFA Alexander Popinker

Determining your annual tax bill, gathering paperwork, filling out complex forms, and submitting returns inevitably comes with significant time investments each year—and often monetary costs as well.

This guide examines the factors impacting the cost of filing taxes, provides price comparisons across all IRS-approved methods, and offers money-saving recommendations tailored to your tax situation. Learn how to maximize savings and avoid penalties when tax season rolls around.

How Much Does It Cost To File Taxes?

The cost to file taxes can range from $0 for taxpayers who qualify for free filing programs up to $1,000+ for those whose situations require hiring professional CPAs or tax attorneys, with most filers able to prepare their federal and state returns accurately using DIY software for under $200 total. Overall tax prep costs typically span between $0 for simple returns to $500+ for self-employed filers or those with complex finances and income sources.

To compare bottom line costs, here is an estimated price range breakdown for common filing scenarios:

Filing a Simple Tax Return with Free DIY Software

Cost Component	Price
Federal return	$0
State return	$0 – $50
Total Cost	$0 – $50

Filing Taxes with Mid-Tier DIY Software

Cost Component	Price
Federal return	$50 – $120
State return	$20 – $50 per state
Total Cost	$100 – $300+

Hiring a Certified Public Accountant (CPA)

Cost Component	Price
Federal return	$250 – $600
State return	$50 – $150 per state
Expert help	Included
Total Cost	$400 – $1,000+

Prices rise for tax attorneys handling complex situations. Carefully evaluate if a tax pro provides enough value to justify higher costs over DIY options.

According to Wishup, the cost to file taxes starts at around $220 for a basic Form 1040 with a state return and no itemized deductions. However, this cost can increase to $300 to $600 or more if the return includes multiple income sources or itemized deductions. Additionally, Wishup offers tax filing starting at $150, which is lower than many traditional services.

On Investopedia, the average fee for preparing a Form 1040 with Schedule A (itemized deductions) and a state income tax return is reported as $323. For a Form 1040 with the standard deduction and a state return, the average fee is $220. Additional fees apply for complex forms like Schedule C ($192) or Schedule D ($118).

The Harness Wealth article notes that a basic tax return for an individual with a W-2 and some itemized deductions may cost around $500. For more complex needs, such as employee equity or cryptocurrency, the cost can start at $1,500 or more per annual tax filing. For startups and small businesses, tax preparation fees generally range from $1,500 to $5,000 annually.

Lastly, Taxes for Expats lists their tax preparation services starting at $450 for a core Form 1040 federal tax return package. For those with additional income sources beyond the core package, the cost is $525. A streamlined procedure for expats costs $1,450.

Free Tax Filing Options

Over 100 million Americans qualify to prepare and submit both federal and state tax returns completely free of charge through IRS partnerships, assistance programs, and taxpayer benefits.

IRS Free File Program

This valuable IRS initiative allows taxpayers earning $73,000 or less annually to utilize guided tax preparation software at no cost to file their federal return. The IRS partners with leading tax software providers like TaxAct, TaxSlayer, Credit Karma, FreeTaxUSA, and more to offer this service. As long as your adjusted gross income falls under the threshold, you can file both federal and state returns for free under this program.

Who Qualifies for Free Filing?

You qualify to file for free if your income was less than:

• Single Filers: $73,000 AGI
• Married Filing Jointly: $108,000 AGI
• Active Military: $72,000 AGI

Compare your adjusted gross income to confirm eligibility. Those above the thresholds can utilize the same software, just without the free guarantee.

IRS Volunteer Tax Preparation Assistance

Beyond free software, the IRS also sponsors two programs offering in-person and virtual tax preparation assistance completely free of charge:

• Volunteer Income Tax Assistance (VITA): This IRS program utilizes certified volunteers to prepare basic federal and state returns for low-to-moderate income households earning $58,000 or less annually. They can inform filers of tax credits like the Earned Income Tax Credit (EITC) and help resolve notices from the IRS.
• Tax Counseling for the Elderly (TCE): This IRS-supported program specializes in assisting taxpayers age 60 and older with their tax preparation, regardless of income level. IRS-certified volunteers provide free filing assistance tailored to seniors’ needs.

These programs offer a guided approach to filing taxes accurately while maximizing potential refunds and credits.

Free Software Versions

Many leading tax software providers like TurboTax, H&R Block, Cash App, Credit Karma and more offer limited free versions of their online filing software for simple federal returns. Income and tax form restrictions apply, usually capping eligibility around $40,000 in income. State returns typically cost extra.

Free Software Options and Limitations

While options exist for preparing basic returns, carefully review the eligibility limitations:

• TurboTax Free Edition: Covers simple federal returns only, income under $40,000
• H&R Block Free Online: For simple federal filing only, income under $73,000
• Cash App Taxes: Free for all simple federal and state returns
• Credit Karma Tax: Free for all simple federal and state returns

For simple W-2 employees, filing directly through IRS Free File or using free software suffices in most cases. Self-employed filers or those with investments must upgrade to paid software versions.

You might also like our articles about the cost of H&R Block, Found Plus, or filing for bankruptcy.

Popular Online Tax Software

Once income or tax situations exceed free filing thresholds, using paid DIY tax software still offers major savings over hiring an accountant or CPA. Here is an overview of the different pricing tiers across top tax programs:

TurboTax Pricing Tiers

• Deluxe: Covers W-2 income, donations, education expenses, costs $60 for federal, $40 per state return
• Premier: Includes rental property, stock sales, retirement income, costs $90 for federal, $40 per state
• Self-Employed: For contractors, freelancers, small business owners, costs $120 for federal, $45 per state return
• Live Full-Service Add-On: TurboTax experts review your return for you for an extra $170+

Potential TurboTax Upcharges:

• Filing amended returns: $50 add-on
• Audit support: $50 add-on
• Form 1099-NEC for contractors: $20 add-on

H&R Block Online Pricing

• Deluxe: Covers W-2 income, childcare expenses, education credits, costs $50 for federal, $37 per state
• Premium: Includes Health Savings Account deductions, rental property, costs $75 for federal, $37 per state
• Self-Employed: For freelancers, contractors, small business owners, costs $85 for federal, $37 per state
• Tax Pro Review: H&R Block expert review of your return for $125+

Potential H&R Block Upcharges:

• Prior year returns: $30
• Amended return filing: $50
• Form 1099-NEC filing: $12.50 per form

TaxAct Pricing Plans

• Deluxe+: Covers W-2 income, dependent care costs, education credits, costs $25 for federal, $39 per state
• Premier+: Includes itemized deductions, HSAs, investment income, costs $35 for federal, $39 per state
• Self-Employed+: For freelancers, contractors, rental income, costs $65 for federal, $39 per state
• Audit support: $50 per year add-on
• Amended return filing: $50 add-on

Compare software bundles carefully to avoid paying for unnecessary features. Mid-tier packages between $50-$120 suit most filers.

When To Use a Professional Tax Preparer

While DIY software works for W-2 employees with simple tax situations, for certain filers, hiring a tax pro pays dividends through maximum refunds and avoiding issues.

Cost Ranges by Preparer Type:

• Certified Public Accountant (CPA): $200 – $800+
• Enrolled Agent (EA): $150 – $500
• Tax Attorney: $500+ per hour
• Tax Prep Chains: $80 – $200

When Does a Tax Pro Make Sense?

• Self-employment, rental or business income, complex finances
• Previous audits or issues with the IRS
• Tax planning for investments, retirement, inheritance
• Claiming unclear deductions, expenses, or credits
• Maximizing business expense deductions
• Navigating divorce, marriage, adoption, or death

For W-2 income without complicated tax situations, DIY software still works for most and costs less than hiring a CPA. Tax pros earn their fees through identifying savings and preparing meticulous returns when finances get complex.

State vs. Federal Returns

Residents in 43 U.S. states plus Washington D.C. face additional state income tax filing requirements, which can add preparation expenses:

• State software filing fee: $20 – $50 per state return
• States with no income tax filing: AK, FL, NV, NH, SD, TN, TX, WA, WY (9 total)
• Free direct state filing portals: About 15 states offer direct free state tax filing options if you meet income limits

Strategies to Minimize State Tax Filing Costs

• Review state filing requirements – about 15 states offer direct free filing portals
• Take the standard deduction on your state return, if possible, as itemizing often costs more
• Compare bundled and unbundled DIY software prices for state returns to save
• Or, hire a tax pro experienced in both your state + federal situation

Penalties and Extensions: Potential Extra Costs

Missing deadlines results in fees, so file on time or request extensions.

• Late filing penalty: 5% per month on unpaid taxes, up to 25%
• Late payment penalty: 0.5% monthly plus interest
• Extensions: Free to file, but taxes owed must be paid by April 15

IRS penalty relief or payment plans may reduce fees if you qualify.

How To Lower Your Tax Prep Costs

Follow these expert tips to keep more money in your pocket by minimizing filing expenses:

• Harness free file software if eligible based on income limits – this saves up to $200 compared to paid DIY options
• Prefer more cost-effective DIY providers like Cash App Taxes or Credit Karma – avoid overpaying for unnecessary features
• Take all eligible above-the-line and itemized deductions to lower taxable income
• Review pre-tax benefits like HSAs, 401(k) plans, and FSAs to reduce taxable income
• Research tax credits like the Earned Income Tax Credit (EITC) or Child Tax Credit before filing
• Start the tax prep process early to avoid rushing or making mistakes near deadlines
• Use online tax calculators to estimate your tax liability and prepare for costs in advance

The optimal filing solution combines accuracy, maximized savings, and affordable preparation costs.

Picking the Best Tax Prep Method

Choosing the preparation option best matched to your tax profile saves money while avoiding IRS issues.

• Simple W-2 income with limited deductions: IRS Free File or free software
• Itemized deductions, rental income: Mid-tier DIY software, $50-$120
• Self-employment, business income: DIY software with live help or tax pro, $150+
• High assets, complex finances and taxes: Tax attorney or CPA, $300+

Compare multiple providers using these criteria before settling on a filing method.

Final Words

With the full menu of tax filing options laid out, you can select the preparation method best matched to your tax situation while optimizing affordability. Carefully compare providers using criteria like price, accuracy, audit support, and customer service before committing to a solution.

Many filers overpay for unnecessary bells and whistles with DIY software or hire tax pros when self-filing would suffice. Take time to analyze your specific tax circumstances and income sources. Weigh the value of tax credits, deductions, and guaranteed accurate returns against higher preparation costs. An informed, strategic approach reduces tax filing bills year after year while avoiding IRS penalties and problems down the road.

Answers to Common Questions

Who has cheaper taxes?

States like Florida, Texas, Washington, and others with no income tax have cheaper overall taxes for residents. Alaska, Nevada, South Dakota, Wyoming, and New Hampshire also rank among the most tax-friendly states thanks to low- or no-income tax rates. Delaware ranks #1 for the lowest taxes on retirees. Residents in states with no income tax keep more of their earnings and pay less when filing taxes each year.

What is the best way to file taxes?

For most simple, straightforward tax situations, filing directly through cost-effective DIY software like TurboTax, H&R Block, or Credit Karma provides the best and cheapest way to file. Mid-tier software options cost between $50-$100 for both federal and state returns while guiding users through the process seamlessly. Only taxpayers with high assets, complex finances, self-employment income, or past audits require professional CPAs or attorneys charging $200+. Choosing the right tax prep method for your needs saves money.

Which city in the US has no tax?

Seven U.S. states levy no personal income tax at all, so residents of any city located within Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, or Wyoming avoid state tax filing requirements entirely. Additionally, New Hampshire and Tennessee have no income tax but do tax dividends and income from investments over a certain threshold.

Among cities situated in states with income tax, Cheyenne, Wyoming has among the lowest effective tax rates in the U.S., followed by cities like Seattle, Washington and Anchorage, Alaska. Reviewing individual city and county taxes provides a full picture of an area’s tax burden.